IQE announces strong strategic progress
H1 revenue of £86.2m was up 8.4 percent in line with previously issued guidance
Compound semiconductor wafer company IQE plc has announced its interim results for the six months ended 30 June 2022. Revenue of £86.2m (H1 2021: £79.5m) was up 8.4 percent on a reported basis (1.4 percent growth at constant currency due to a currency tailwind), in line with previously issued guidance
Americo Lemos, CEO of IQE, said:“Earlier in the year we set out our strategic priorities to transform IQE, and in the first half of 2022 we made strong progress against these goals. Simultaneously, the business has demonstrated resilience despite the ongoing challenging global environment. The importance of compound semiconductors to a series of fundamental mega trends which will shape the global economy is gaining increasing recognition. I remain excited by the strength of IQE’s proposition coupled with the opportunities ahead to diversify and grow our business to deliver value for all our stakeholders.”
Wireless revenue of £46.6m (H1 2021: £41.6m) was up 12.0 percent on a reported basis and 4.3 percent at constant currency. This was driven by GaN sales to aerospace and security customers. And slso aided by resilient GaAs sales weighted towards 5G and WiFi 6 markets, countering a slowdown and inventory build in the wider handset market
Photonics revenue of £38.5m (H1 2021: £36.4m) was up 5.7 percent on a reported basis and down -0.6 percent on a constant currency basis. This was driven by continued maintenance of high market share in 3D Sensing VCSELs for consumer markets, and a resurgence in InP products for datacom.
CMOS++ revenue was £1.1m (H1 2021: £1.5m) a decrease of 27.2 percent on a reported basis and 33.3 percent on a constant currency basis, due to the re-phasing of a large customer order from H1 2022 to H2 2022
Adjusted EBITDA was £12.3m (H1 2021: £11.6m) up 6.0 percent on a reported basis and flat at constant currency, in line with previously issued guidance. Reported operating loss owas £7.4m (H1 2021: £1.9m loss).
AThe group’s refreshed strategy is focussed on building a solid platform for growth in 2022 to deliver further progress in 2023 and beyond. As part of the strategy, the company has developed the world’s first commercially available 200 mm (8 inch) VCSEL epiwafer, enabling a step-change in unit economics. It has also has embarked on a global site optimisation programme. It closed its Singapore site in June 2022, and there is a project to close the Pennsylvania site and consolidate US MBE operations within the North Carolina site. This is on track to be completed by 2024.
Guidance
IQE management reiterates its full year 2022 revenue guidance of low single digit percentage growth (at constant currency), as strong Photonics sales driven by 3D sensing VCSELs and emerging revenues in microLEDs offset a degree of anticipated, macro-driven, softness in Wireless markets.
Operations remain resilient to macro-economic and supply chain risks. IQE says is in a unique position to work with customers to ensure supply chain resilience and build strategic capacity across its global footprint.
At this level of revenue, the group anticipates a similar adjusted EBITDA margin percent to 2021 (at constant currency).
It is expected that full year PP&E capital expenditure will be in the range of £10-15m and we anticipate c.£8m of capitalised intangibles relating to development costs and systems transformation, both in line with previous guidance.
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