20 July 2015

IQE's first-half 2015 revenue grows year-on-year

In a trading update for first-half 2015, epiwafer foundry and substrate maker IQE plc of Cardiff, Wales, UK has reported results in line with market expectations and ahead of the same period last year, delivering growth in EPS and a further reduction in borrowings.

Expected revenue is £53.2m, down 11% on £60m in second-half 2014 but up 2% on first-half 2014's £52m. Adjusted operating profit is £6.7m, up on first-half 2014's £6.4m. Adjusted fully diluted earnings per share (EPS) is 0.9p, up on first-half 2014's 0.86p. Net debt has been cut further, from £35.5m a year ago and £31.3m at the end of 2014 to £31.1m at the end of June 2015.

"This was a solid start to the year, in which we delivered continued improvement in our financial results and further reduced our borrowings," notes chief executive Dr Drew Nelson.

In the wireless market, key customers have continued to enjoy strong revenue growth, driven by new flagship smartphone platforms, growth in sales to China, and upgrades to 4G/LTE. This has primarily benefitted their filter businesses, but also provides a stable platform for compound semiconductor components including power amplifiers (PAs), notes IQE.

Strong sequential wireless revenue growth is expected in second-half 2015, primarily reflecting normal seasonal trends. Also, although of less consequence, some temporary production disruption suffered by one customer during second-quarter 2015 has skewed some sales into Q3. This customer-specific issue did not relate to IQE's products, and has since been resolved.

"Our wireless business is proving to be a stable platform to leverage strong and sustainable growth in our photonics business," says Nelson. The photonics business has continued to perform well, enjoying strong and sustainable revenue growth driven by a wide array of end-market drivers including data centres, optical communication, industrial heating, and a range of sensing applications.

In advanced solar, during first-half 2015 IQE began pilot production with its triple-junction technology, which is now being deployed into field installations. The end customer has a pipeline of projects scheduled for deployment in 2016/17, which IQE expects to drive steady growth in demand for epiwafers.

Good progress continues to be made in IQE's other markets, including gallium nitride and compound semiconductor on silicon technologies, which are expected to transition to volume over the next 2-3 years. "We are making encouraging progress in advanced solar and power switching, both of which we believe will be high-growth markets for IQE in the near future," summarizes Nelson.

On 9 July IQE also announced a new joint venture with Cardiff University to drive the development and commercialization of compound semiconductor technologies in Europe, and to provide an anchor for the development of a compound semiconductor cluster.

"The second half has started well, and we are on track to meet our expectations [for the full year] and deliver continued growth in profits and cash generation," concludes Nelson.

IQE will release its final first-half 2015 results on 15 September.

See related items:

IQE and Cardiff University establish JV to develop and commercialize compound semiconductor technologies in Europe

IQE second-half 2014 revenue up 15% on first-half

IQE increases underlying profit in first-half 2014 despite 17% year-on-year drop in revenue

IQE's first-half revenue down 17% year-on-year to £52m, but profitability up

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