Year-end trading update: Strong demand across full product range delivers record revenues and profits ahead of market expectations
20 January 2011
Cardiff, UK - 20 January 2011: IQE plc (AIM: IQE, “IQE” or the “Group”) the leading global supplier of advanced semiconductor wafer products and services to the semiconductor industry, provides 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).
IQE’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 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.
Dr 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 defence applications are generating demand across all our key markets.
“We continue to make excellent progress in the development and commercialisation 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.”
IQE expects to report its preliminary results on 29 March 2011.
IQE plc (+44 29 2083 9400) Drew Nelson Phil Rasmussen Chris Meadows
Espirito Santo Investment Bank (+ 44 20 7456 9191) Richard Crawley James Bromhead
College Hill (+44 20 7457 2020) Adrian Duffield Carl Franklin
Note to Editors
ABOUT IQE (www.iqep.com) IQE is the leading global supplier of advanced semiconductor wafers with products that cover a diverse range of applications, supported by an innovative outsourced foundry services portfolio that allows the Group to provide a 'one stop shop' for the wafer needs of the world's leading semiconductor manufacturers.
IQE uses advanced crystal growth technology (epitaxy) to manufacture and supply bespoke semiconductor wafers ('epi-wafers') to the major chip manufacturing companies, who then use these wafers to make the chips which form the key components of virtually all high technology systems. IQE is unique in being able to supply wafers using all of the leading crystal growth technology platforms.
IQE's products are found in many leading-edge consumer, communication, computing and industrial applications, including a complete range of wafer products for the wireless industry, such as mobile handsets and wireless infrastructure, Wi-Fi, WiMAX, base stations, GPS, and satellite communications; optical communications, optical storage (CD, DVD), laser optical mouse, laser printers & photocopiers, thermal imagers, leading-edge medical products, barcode, ultra high brightness LEDs, a variety of advanced silicon based systems and high efficiency concentrator photovoltaic (CPV) solar cells.
The manufacturers of these chips are increasingly seeking to outsource wafer production to specialist foundries such as IQE in order to reduce overall wafer costs and accelerate time to market.
IQE also provides bespoke R&D services to deliver customised materials for specific applications and offers specialist technical staff to manufacture to specification either at its own facilities or on the customer's own sites. The Group is also able to leverage its global purchasing volumes to reduce the cost of raw materials. In this way IQE's outsourced services, provide compelling benefits in terms of flexibility and predictability of cost, thereby significantly reducing operating risk.
IQE comprises eight operating facilities located in Cardiff (two), Milton Keynes and Bath in the UK; in Bethlehem, Pennsylvania, Somerset, New Jersey and Spokane, Washington in the USA; and Singapore. The Group also has 11 sales offices located in major economic centres worldwide.