Trading Statement
IQE PLC
27 January 2005
27 January 2005
IQE plc Trading Update
IQE plc ('IQE', 'the Company'), a leading supplier of advanced semiconductor
materials, is pleased to provide a trading update, following a number of
significant developments during the latter part of 2004, where substantial
progress was made in a number of key areas of the Group's activities.
Wireless markets
In the US, a major outsource agreement to supply a leading RF wireless component
manufacturer with virtually all of its wafer requirements was concluded during
the fourth quarter, resulting in that particular customer closing down its in
house wafer manufacturing activity in favour of outsourcing both its production
and development needs to IQE Inc. Volume shipments to this customer began in
the last few weeks of the year and are continuing, with increasing requirements
expected during the course of 2005. This, together with qualifications with
leading Asian wireless component manufacturers due to conclude in the first half
of 2005, and increasing requirements from existing customers in the US, lead
us to expect a significant upturn in business during 2005, enabling full
profitability of this unit to be achieved by the end of the first half.
In addition, the Company's US subsidiary, IQE Inc has several other outsource
and development opportunities under discussion and has recently received a
Certified Supplier Award from a major U.S. Government contractor, for the
manufacture of RF components. Achieving this status qualifies IQE to supply
epitaxial wafers for use in significant production volumes of RF devices for
next-generation applications taking place over the next several years starting
in 2005.
Optoelectronic markets
The Group has continued to develop its product and customer base in consumer
products, such as DVD, CD, industrial applications, Vertical Cavity lasers for
printing, high resolution copying, short distance communications and optical
sensing, High Brightness LEDs and Telecoms related products. The market for
optical storage components weakened somewhat during the fourth quarter, and High
Brightness LED markets were flat, but this was offset by strengthening markets
in telecoms and products for industrial applications. The Group has successfully
completed a number of new product qualifications which should result in new
revenue streams for the Group as IQE's customers bring these to market.
Silicon Markets
Our Silicon business received device results during the fourth quarter from a
leading IC manufacturer on IQE's proprietary 'UltraSmooth' strained silicon
product that showed a very significant increase in speed due to the better
surface quality of IQE's product compared with other strained silicon products.
The materials are also under device evaluation by several other leading
companies, and are being used to develop next generation strained silicon on
insulator products. As a result of IQE Silicon's growing reputation for advanced
product development, two further customer-funded development contracts have been
received both of which commence in early 2005. Standard silicon epi products are
expected to show consistent growth based on customer forecasts.
Dr Drew Nelson, CEO, commented
'The Group enters 2005 having made substantial progress in the last months of
2004. The Group expects to report revenues for 2004 of not less than £15.3
million, which, although below our previous expectations, primarily due to a
weak third quarter and adverse exchange rates, have still resulted in us
achieving our expectations for EBITDA and cash levels. A number of positive
developments, including the winning of a major outsource contract worth around
$25m over the next two years, enabled the Group to exit 2004 with its largest
order book for two years, and an exit revenue run rate which will deliver
growing revenues in 2005. We believe we have sufficient capacity and resources
within the Group to deliver improved shareholder returns in the current year and
beyond.'
IQE's preliminary results for the year ended 31 December 2004 are expected to be
announced on 22nd March 2005.
For further information please contact:
IQE plc: +44 29 2083 9400
Drew Nelson, President & Chief Executive
Stuart Hall, Finance Director
Chris Meadows, Investor Relations Manager
Tim Thompson/Nicola Cronk, +44 20 7466 5000
Buchanan Communications:
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