18 November 2019 – trading update
A disappointing trading update has been released and this has hit the company’s share price. IQE now expects to deliver revenue of between £136m and £142m, compared to the previous guidance range of between £140m and £160m, including a forex tailwind of around £3m. A mid-single digit adjusted operating loss is now expected due to lower than anticipated revenue, additional one-off commissioning costs at the new foundry in Newport, general diseconomies of scale associated with operating at low volume in some sites and the inclusion of losses for the Singapore CSDC entity as announced in October. The company has been taking steps to reduce costs and capital expenditure and Capex will be towards the bottom end of the previous guidance of between £30m and £40m. Net debt at the year end is expected to be between £15m and £20m. The company expects that total revenue will return to moderate growth in 2020. There are now better opportunities elsewhere and we downgrade to HOLD.