IQE set to exceed full-year expectations

(ShareCast News) - Semiconductor wafer products manufacturer IQE posted an update on current trading and its outlook for the year ending 31 December on Wednesday.The AIM-traded firm said that, since the announcement of its interim results on 13 September, its trading has continued to be strong across multiple markets, particularly in the photonics business.As a result, the group announced that it is on track to deliver FY 2016 revenue and adjusted operating profit ahead of expectations.It is anticipated that revenues will reflect a double digit rate of growth year on year, and that H2 revenues will be up sequentially over H1. The wireless business largely performed as expected through 2016, IQE's board reported, and remains on track for year on year growth.Photonics continued to be the fastest growing business segment, enjoying strong double digit growth year on year.Progress with customer qualifications in photonics during 2016 provided a solid platform for continuing strong growth for this business, the board added, and in response to the opportunity, the group has increased its capital investment in H2.InfraRed performed in line with expectations, and license income was reduced from the front loaded income enjoyed in 2015.Revenues, which are primarily dollar denominated, also benefitted in H2 from the devaluation of sterling following the UK's EU membership referendum in June.The currency impact on profitability is largely presentational, however, as the majority of the group's costs are also denominated in dollars.IQE said the balance sheet impact is also presentational, as both non-sterling assets and liabilities will be translated at the year-end spot rate, which is expected to impact positively on the presentation of shareholder funds.Additionally, although the group has de-leveraged its balance sheet during 2016 in underlying dollar terms, the presentation of that is expected to be distorted adversely in sterling.As a result, the board remained confident that the group will exceed current FY 2016 expectations for both revenue and adjusted operating profit."IQE has made good progress in 2016, and is performing well against its strategic goals," said chief executive Drew Nelson."The breadth of IQE's technologies is a competitive advantage that is enabling its continued growth, and will provide a platform for strong cash generation over the coming years."I would like to thank the management and staff of IQE whose hard work and commitment have made this possible."Dr Nelson said IQE will report its FY 2016 results on 21 March 2017. IQE