For the year ended 31 December 2018, IQE announced that consolidated revenue increased 1% to £156.3m without the recognition of any license income. PBT was £14.0m, whereas fully diluted EPS was 1.38p for this period. Adjusted operating profit declined year on year to £16m in 2018 from £26.5m.
According to IQE operating profit and margins were adversely affected by the currency headwind, production inefficiencies resulting from lower VCSEL production volumes, a higher proportion of lower margin wireless revenue, material investment in low and zero margin VCSEL qualifications for multiple new photonics customers and Newport foundry pre-production costs for recruitment, increased headcount and training.
Wafer revenue at constant currency (ex-licence income) grew 5.3% to $209.3m. Wireless revenue increased 6.6% to £97.8m. Photonics revenue declined 8.1% to £43.8m. Infrared revenue increased 9.5% to £13.1m.
IQE has made significant progress in positioning itself for operational execution at scale; with the New Jersey site closure, capacity expansion projects in Massachusetts, Taiwan and the commencement of production of the Epi-foundry in Newport are slated for completion in H1 FY19.
According to the board, given the market opportunity and the group’s operational readiness, the outlook for FY19 and beyond remains strong. Dr Drew Nelson, IQE’s Chief Executive, said: “The investment we have made in site rationalisation, increased production capacity and new products and the opportunity that this has created in the key sector areas of sensing, connectivity and energy, will deliver margin expansion, growing profitability and increasing free cash flow in 2019 and beyond”.