News

5 August 2009

 

Auto makers offer hope for IPG Photonics

Fiber laser system specialist IPG Photonics is hopeful that orders from beleaguered car manufacturers will boost its revenues in 2010 as recessionary pressures ease.

However, the Massachusetts-based company, which uses MBE to manufacture the semiconductor lasers that lie at the heart of its high-power systems, must first withstand a much weaker economic environment.

IPG announced sales of $40.4m for the second quarter of 2009, down 28% year-on-year and also down from $45.4m in the opening three months of this year. That slump in revenue resulted in a net loss of $1.2m in the second quarter, compared with a net profit of $8.6m one year ago.

“The materials processing market is especially weak in Europe and Asia, which had a significant effect on our sales,” reflected CEO Valentin Gapontsev.

Despite the gloomy results, Gapontsev and his colleagues remain confident that IPG's high-power lasers in particular are showing signs of significant growth in the future:

“We believe demand for our high-power lasers for a variety of material processing applications remained resilient primarily due to market share gains,” said the CEO. “High-power laser markets represent a substantially larger market opportunity with fewer competitors than pulsed laser markets.”

Recent activity in the high-power segment has seen IPG ship a 20kW laser to an un-named customer in the energy sector for what IPG described as “leading-edge research”.

Crucially, the up-front cost of fiber lasers is now approaching parity with carbon dioxide lasers, the traditional competitor to IPG's technology. When added to the comparatively low running cost of fiber lasers, this should mean that IPG will take an increasing share in laser cutting applications when markets rebound.

Encouragingly, IPG has seen shipments to automotive companies increase over the past year, even as the sector has endured its worst period in living memory.

IPG says that existing customer BMW has placed an additional order, along with the Ford Motor Company. Meanwhile, the German operations of Daimler and Audi have shown an interest in IPG's lasers.

Although that interest is unlikely to result directly to any additional sales revenue before the end of the year, it should lead to significant orders in 2010. The auto makers are expected to need upwards of 40 laser systems to meet manufacturing requirements.

But with markets remaining generally subdued until then, IPG's near-term outlook remains conservative. For the third quarter of the year, it is expecting revenues of between $39m and $44m, which should allow a near break-even performance on the bottom line.

See related item:

Industrial laser sales to fall 32% to 2004 levels this year

Search: IPG Photonics Fiber lasers

Visit: www.ipgphotonics.com

The author Michael Hatcher is a freelance journalist based in Bristol, UK.