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IQE Expects To Smash Financial Targets
Strong demand across its full product range has delivered record revenues and profits ahead of market expectations. The firm expects full year sales to exceed £71.7 million.
IQE, a global supplier of advanced semiconductor wafer products and services to the semiconductor industry has provided a trading update for the year ended 31 December 2010.
Second-half revenues and profits continued to show strong growth as a result of higher demand across IQE’s increasingly diverse portfolio of advanced semiconductor wafer products. Revenues for the second half are expected to be more than 17% higher than the first half, delivering full-year revenue growth of over 36% to give full year sales of at least £71.7m.
IQE’s high operational gearing is expected to translate the record full year revenues to an increase in EBITDA of over 56% to at least £12.6m, ahead of consensus market forecasts of £11.9m (source: Bloomberg).
The firm’s strong performance throughout the year reflects the increasing reliance on advanced semiconductor materials across a broad spectrum of consumer, industrial and communications applications. The dramatic growth in portable devices from smartphones to tablets has been the major driver for increased demand in Gallium Arsenide (‘GaAs’) wafers specifically for wireless applications. Industry analysts expect the trend towards greater functionality and portability to continue.
Demand for advanced compound semiconductor materials is likely to accelerate following announcements earlier this month at the Consumer Electronics Show (CES) that manufacturers and carriers are stepping up the rollout of 4G devices supported by networks capable of download speeds of up to ten times faster than 3G.
IQE’s business growth has been further supported by increasing demand across the Group’s diverse range of markets, from advanced semiconductor materials for optoelectronic communications to
January / February 2011
www.compoundsemiconductor.net 81
high-efficiency solar cells and LEDs. For this reason, optoelectronic products will account for a growing proportion of the Group’s full-year revenues.
A successful and oversubscribed £21m fundraising was completed in the last quarter of 2010. The funding was used to strengthen the balance sheet and to allow for expansion of manufacturing capacity across the Group. Also during the last quarter, the Group acquired Galaxy Semiconductor, the sole US provider of advanced infra-red imaging materials to high-value military and other markets. Now fully integrated within the larger Group, Galaxy is performing ahead of initial expectations and is contributing well to the business.
As a result of the fundraising, the end-of-year balance sheet is expected to show a significant increase in net funds, providing the resources for the Group to selectively invest in additional production capacity to satisfy projected growing demand over the coming months and years.
Drew Nelson, IQE’s Chief Executive, said:
“2010 has been a tremendous year for the Group, with record sales and profits anticipated. Our core business of wireless-related products for all forms of mobile device has continued to show exceptionally strong growth, whilst new and emerging products for consumer, industrial and defense applications are generating demand across all our key markets.”
“We continue to make excellent progress in the development and commercialization of key intellectual property that we expect will contribute to IQE’s revenues during 2011 and help to increase the Group’s competitive advantage and leading positions in a number of high-growth markets.”
“The Board remains confident that IQE is well positioned to continue its strong growth in 2011,” he concluded.
IQE expects to report its preliminary results on 29 March 2011.
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