IQE announced its unaudited half-year results for the six months to 30 June 2018. Reported PBT increased by £1.0m to £6.6m (H1 2017: £5.6m). Forex headwind produced a drag of c. £2m on reported PBT.
The conversion of operating profit (£7.6m; H1 2017: £10.7m) into operating cash (£7.6m; H1 2017: £11.2m) was 100% after funding an increase of £6.6m (H1 2017: £4.5m) in working capital. Net cash at end-H1 2018 was £40.6m (H1 2017: net debt of £41.9m).
IQE exhibited sales growth at constant currency in all the three primary markets, with Wireless up 11% YoY, Photonics up 30% YoY, and InfraRed up 11% YoY. Guidance re-confirms consensus forecasts range as H2 2018 ramp in VCSELS re-commences.
At constant currency, revenue from the largest photonics customer was flat YoY in H1 2018, while revenue from other photonics customers was up 40% YoY. The photonics business unit increased to 25.8% of total wafer revenue. Wafers gross profit was flat at £17.1m.
Dr Drew Nelson, IQE’s Chief Executive, commented: “Reported wafer revenue increased 5.4% despite strong forex headwinds of ~10%. Together with the renewal of our long-term supply agreement with our largest tier 1 wireless customer and the manufacturing milestone reached with our first NIL edge emitting DFB laser production order, this demonstrates both the strength of our existing core business and the new opportunities that we are creating as we continue to bring our unique innovative material capabilities and associated nanoscale fabrication technologies to market.”