24th Mar 2020 12:00
(Alliance News) - Wafer maker IQE PLC on Tuesday said Covid-19 has not yet hurt trading, stressing the company has the necessary funding should it see a downturn.
Shares were 39% higher on Tuesday in London at midday at 27.84 pence each.
IQE was meant to be reporting 2019 financials on Tuesday. However, the UK Financial Conduct Authority has asked for a two-week moratorium amid the market disruption caused by Covid-19.
The Cardiff-based company, which supplies wafers to the semiconductor industry, said revenue in 2019 was 10% lower than the year prior at GBP140.0 million. This was mainly due to the loss of two customers, one in the Wireless unit and one in Photonics.
IQE has guided for an adjusted operating loss of GBP4.7 million, from a profit of GBP16.0 million in 2018, in line with guidance given back in November. This has been caused by negative operating leverage and an increase in depreciation and amortisation from targeted investments.
"In 2019, IQE faced extremely challenging market conditions and our financial performance reflects the considerable disruption in global semiconductor markets and supply chains, caused by the geopolitical environment," said Chief Executive Drew Nelson.
"We remain confident in IQE's ability to adapt to changes in global technology markets as a result of our geographic and product diversity. We have also made significant strategic and operational progress in 2019, including the completion of the infrastructure phase of our global expansion projects," he added.
In the first quarter of 2020, IQE has met expectations, with forecasts from customers "relatively strong".
The company said production has not yet been significantly disrupted by Covid-19, with all sites operating as normal. As a "critical" supplier, IQE said it would not be as affected by a lockdown.
"The effects of the coronavirus on global economic output in 2020 and on semiconductor demand are as yet uncertain. Given the significant current levels of uncertainty, we are unable to provide more explicit guidance at this point in time," said IQE.
"The group has access to material debt facilities should it be required in the event of a significant downturn. IQE has a long-standing and trusted relationship with our bankers HSBC Holdings PLC who remain supportive. We are in close ongoing dialogue regarding the evolving effects of coronavirus on supply chains and markets. In the event of a significant slowdown, we will work proactively with HSBC to ensure the ongoing liquidity of the group," IQE continued.
By George Collard; [email protected]
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