20th Mar 2019 10:05
LONDON (Alliance News) - Semiconductor wafer maker IQE PLC on Wednesday said 2018 was a "very difficult and challenging year" for the company, with profit declining despite revenue growth.
For 2018, IQE posted a pretax profit of GBP6.7 million, less than half the GBP15.1 million reported for 2017. This came despite revenue rising marginally, by 1.1%, to GBP156.3 million.
On an adjusted basis, IQE's pretax profit slipped to GBP14.0 million from GBP24.5 million.
Profit, IQE said, was hit by currency headwinds, production inefficiencies, a higher proportion of lower margin wireless revenue, investment in "low and zero" margin operations, and costs at its new Newport foundry.
Wafers now make up the entirety of IQE's business, with Licensing only contributing GBP1.9 million in 2017 and none in 2018.
Wireless wafer revenue rose 7% to GBP97.8 million, with wireless demand strong, but photonics wafer revenue fell 8% to GBP43.8 million, with demand hurt by excess inventory.
Chief Executive Drew Nelson commented: "2018 was a very difficult and challenging year for IQE Group from many perspectives; including the tragic and untimely death of Phil Rasmussen.
"Our disappointing 2018 financial performance was materially impacted by a very substantial vertical-cavity surface-emitting laser inventory correction in the first half of 2018 and the sudden disruption in a highly significant supply chain causing greatly reduced short-term demand for vertical-cavity surface-emitting laser wafers during the last two months of the year."
"Compounding this is the current well-heralded softness in the smartphone market," he added.
IQE's former chief financial officer Phillip Rasmussen died in a cycling incident in March last year.
Looking ahead, IQE said 2019 is a "year of opportunity", despite some short term headwinds in the form of inventory levels and general semiconductor softness.
These will affect first half revenue and profit, but IQE believes the effect will be temporary.
Shares were 6.1% lower on Wednesday morning at 78.30 pence each.
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