IMI Delivers Increased Operating Profit

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Integrated Micro-Electronics Inc. (PH: IMI), a leading global manufacturing solutions company, today reported financial results for the first quarter ended March 31.

Highlights           

• First quarter consolidated revenues of $199.1 million or P=9.4 billion decreased by 1.1 percent year-on-year but increased by 3.2 percent sequentially.
• Operating income for the first quarter reached $9.2 million or P=436.0 million, an increase of 8.4 percent compared to the same quarter a year ago. Net income was $6.5 million or P=311.0 million, a decrease of 3.7 percent.
• Operating income margin and EBITDA (earnings before interest, taxes, depreciation and amortization) margin rose 40 basis points and 71 basis points to 4.6 percent and 7.9 percent, respectively. Net income margin dipped slightly by 9 basis points to 3.3 percent.
• Capital investments in the first quarter totaled $8.6 million, higher by 57 percent from last year with a significant portion of these investments directly supporting new business awards.

Business Performance

Consolidated revenues of $199.1 million or P=9.4 billion decreased by 1.1 percent year-on-year but increased by 3.2 percent sequentially from the fourth quarter of 2015 largely due to the company’s continuing shift in revenue mix to new platform technologies.

The transition reflects the company’s strategy to limit some of its low-margin consumer electronics businesses and the discontinued products in computer peripherals while recent new product introductions in automotive and industrial have just started to ramp-up.

IMI’s China operations posted $66.6 million in revenues, a decrease of 3.3 percent mainly due to the slowdown of customer demand for consumer electronics, including programs with phased out models and reaching end-of-life. The decrease was partly offset by a stronger performance of the telecom segment which grew 24 percent driven by turnkey projects for various customers. 

The company’s Europe and Mexico operations generated $73.3 million revenues in the first quarter, a 6.4 percent growth from the prior year as demand growth for automotive body controls and lighting systems in Bulgaria and Czech Republic mitigated the effect of a weaker euro. In Mexico, revenues increased by 15 percent due to higher demand for plastic injection and assembly. Excluding the impact of changes in foreign currency exchange rates, the total revenues for IMI’s Europe and Mexico plants jumped higher by 11.2 percent.

The EMS operations in the Philippines saw a decrease of 2.3 percent to $51.4 million in revenues. Certain programs in the automotive and industrial segments such as automotive camera, security access controls, asset tag sensors and lighting controls delivered robust growth that partially filled the revenue gap from computer peripherals.             

Operating income reached $9.2 million or P=436.0 million, an increase of 8.4 percent, bringing the operating margin higher by 40 basis points to 4.6 percent primarily due to continuous improvements and disciplined cost management taking place across the entire company.

Net income was $6.5 million or P=311.0 million, a decrease of 3.7 percent. Net income margin was 9 basis points lower than in the previous year and stood at 3.3 percent.

Capital investments in the first quarter reached a total of $8.6 million, higher by 57 percent from last year largely related to the company’s investments in Mexico, Bulgaria, China and the Philippines to support line expansion and new product introduction. The new programs will commence production ramp-up in 2017.

Key messages

IMI president and chief executive officer Arthur Tan says, “Cautiously optimistic about global economic performance for 2016, we are encouraged by the firmer demand that we began to see from advanced markets. In China, as the government continues to implement wide ranging economic reforms, the slowdown of its economy may be short-lived. Soon, the rising middle class in China will be a major driver of domestic consumption of high-end and durable goods like cars and electronics. IMI will capitalize on this trend as we remain an integral part of the global supply chain for electronic products in the automotive and industrial space.”

“We see 2016 as a transition year for IMI. We are upgrading our different manufacturing sites to be capable of producing next-generation products. After investing $35.1 million in CAPEX last year, we expect to spend additional $40.8 million in 2016 which will drive future acceleration in top-line growth. Despite our aggressive expansion, our balance sheet is in the same strong position. We returned $8.6 million to shareholders through cash dividends which were paid during the quarter, reflecting our confidence in the company’s financial strength and growth opportunities.”

“Our foray into motorcycle assembly as the chosen subcontractor for manufacturing for the Ayala Automotive-KTM AG partnership will open new doors for IMI, both in electronics product development and manufacturing and in non-electronics assembly,” says Tan.

Tan sums it up: “We are in exciting times—full of challenges but replete with opportunities. Our capabilities have improved to seize these opportunities.”  

The company’s balance sheet at the end of March 2016 remains robust, with current ratio and debt-to-equity ratio at 1.48:1 and 0.47:1, respectively.

About IMI

Integrated Micro-Electronics Inc. (IMI) is one of the leading global providers of electronics manufacturing services (EMS) and power semiconductor assembly and test services with manufacturing facilities in Asia, Europe, and North America. It serves diversified markets that include those in the automotive, industrial, medical, telecommunications infrastructure, storage device, and consumer electronics industries. Committed to cost-effective and innovative customized solutions (from design and product development to manufacturing and order fulfillment), the company's comprehensive capabilities and global manufacturing presence allow it to take on specific outsourcing needs. A subsidiary of Ayala Corporation, IMI ranks 18th on the latest list of Manufacturing Market Insider for the top 50 EMS providers in the world based on the 2014 EMS-related revenues of companies. For more information, click here.