IQE posts double digit growth in revenues and profits
IQE plc, a supplier of advanced wafer products and wafer services to the semiconductor industry, has announced its final results for the year ended 31 December 2016.
Financial highlights include strong financial performance with continued double digit growth in revenues and profits.
Revenues were up 16 percent to £132.7m (previous year was £114.0m); adjusted operating profit up 17 percent to £22.1m; and adjusted fully diluted EPS up 15 percent to 3.0p.
According to the company a diverse range of growth drivers and end markets has enabled 19 percent growth in wafer sales, reflecting organic growth in all markets, supplemented by a currency tailwind in H2. Photonics revenues up 43 percent to £22.8m; wireless revenues up 15 percent to £91.3m; infraRed revenues up 19 percent to £10.6m; US dollar strengthened 11 percent against sterling in H2 following Brexit vote in June
License income was £6.7m higher than expected, but lower than prior year (£8.0m) which included a significant element of upfront income.
Key milestones delivered on several major photonics programmes during H2 2016, providing significant growth opportunities for 2017 and beyond, according to the company.
Progress with new cREO technology, for example, has delivered some early wins, including delivering a step change in GaN on Silicon technology (the elimination of "˜parasitic channel'), and engagement in development programmes for advanced RF filter applications;
A key customer is engaged in end market qualification using IQE's GaN on Silicon, signifying that this technology is close to commercialisation.
Positive market dynamics, including increasing M&A and sector investment, reflect the increasing focus on compound semiconductors as a critical enabling technology to major growth themes, says IQE, including high speed communication, the internet of things, big data, advanced medical technology, energy efficiency, and autonomous vehicles.
IQE's Joint Ventures in the UK and Singapore mark key milestones in their development as centres of excellence in driving innovation and commercialisation of advanced CS technologies. The UK Joint Venture was a catalyst to securing around £300m of funding towards the continued development of a UK CS Cluster, and the Singapore JV has been selected as a partner in a major programme for CS on silicon technology.
Drew Nelson, IQE CEO, said:"IQE delivered a strong set of results in 2016, with revenues up 16 percent, PBT up 17 percent, and EPS up 15 percent. The continuing growth in revenues, profits and cash generation is being enabled by the Group's portfolio of cutting edge intellectual property, and is being delivered through a diverse range of growth engines.
"Revenues were up in all key markets: wireless, photonics and InfraRed. Photonics continues to be the star of the show with 43 percent year on year growth in sales, and a CAGR of more than 35 percent over the past three years. This is being driven by VCSEL and InP technologies which enable a broad range of applications from fibre optic communication, to advanced sensors, and industrial processes.
"The depth and breadth of photonics development programmes and customer qualifications provide a solid platform for continued strong growth over the coming years.
"InfraRed sales were up 19 percent with a number of notable contract wins during 2016. This division has gone from strength to strength, with good technological and commercial progress. Our largest division, Wireless, also performed well, with revenues up 15 percent. Good progress within the wireless division in 2016, including continued innovation, new product development and new qualifications, has strengthened IQE's strong leadership position in this space and provides a good platform for further growth.
"Our focus on building a strong IP portfolio reflects our vision of global leadership across a range of markets as advanced semiconductor materials become an increasingly important enabler of a wide range of electronics applications. This strategy underpins our strong financial performance, and the exciting outlook we see for our business."
