IQE profits got hammered - currency29 Aug 2018 10:23
(Sharecast News) - Wireless semiconductor manufacturer IQE's profits got hammered during the first half of 2018 as a result
of currency headwinds and the pre-production costs at its new flagship foundry in Newport, including accelerated customer qualification programs as the company invested in branching out from the production of semiconductors for wireless applications.
Nevertheless, management put a brave face on the results, with company chief Drew Nelson saying the company's investments in its VCSEL technology for the manufacture of wafers for sensing applications would deliver "strong" increases in revenues and margins.
"Although the costs of these investments have impacted first half profitability, we are confident they will be pivotal in delivering strong increases in revenue, margin expansion and profitability as 3D sensing is widely adopted in global mobile platforms and other large volume applications," Nelson said.
Total revenues for the six months ending on 30 June were ahead by 4.0% to reach £73.4m from restated figures for the prior year, but alongside a 28.6% drop in operating profits at its wafer operations, its main line of business, from £10.7m to £7.6m.
Also missing was the prior year's £1.0m in profits from licensing revenues.
Profits before tax meanwhile were down by 21.2% to £7.6m and fully diluted earnings per share by 44.5% to 0.76p.
Nonetheless, were it not for those FX headwinds and other extraordinary costs, then profits before tax would have climbed by 14.4% to £11.1m, the company said in a statement.
On a reported basis, profits before tax were in fact £1.0m higher at £6.6m, despite a drag of £2.0m from the higher level of the pound versus a year ago, IQE added.
Over the six months ending on 30 June, the pound had traded at an average level of 1.38 against the US dollar, which was up from 1.26 during the comparable year-ago period.
Cash from operations also weakened, by 32.3% to £7.6m.
The company had £40.6m of cash on hand at period-end, following a successful share placement in November 2017, versus net debt of £41.9m one year ago.
As of 0845 BST, the company's shares were trading 3.46% lower at 100.40p.
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