Dynex Comments on its Unsettled Markets
Lincoln, England, March 22nd, 2012 – Dynex Power Inc., a leading specialist high power semiconductor company, today provided commentary regarding its current market conditions following the well publicized delay in planned investments in high speed railway projects in China and the recent government announcement reducing the growth expectations of the Chinese economy.
The Company indicated that its business is impacted by both of these situations in China. The Company also indicated that the high power semiconductor markets elsewhere in the world are similarly unsettled. Most Dynex customers are suffering the general economic uncertainty that currently characterizes worldwide markets, forcing them to manage their capital investment programs defensively. As a result, orders from Dynex are being placed later than normal. This makes Dynex’s performance beyond six months hard to predict. This also results in a consequent reduction in the Company’s order book. Yet, Dynex’s expectations for its performance in the first half of this year remain on or above the plan the Company described at its AGM last June. There is, however, less clarity as regards expectations for the second half of the year.
The Company reiterated that although high speed rail projects have been slowed because of the the accident involving high speed trains that occurred on 23rd July 2011, the amounts of planned investment have not been reduced nor has the Chinese government’s commitment to the expansion programs lessened. The medium-term demand for the types of IGBTs being manufactured at Dynex remains strong and it is expected that demand will be enhanced by other developments in China as the country places greater emphasis on developing its electricity generation, transmission and distribution networks.
Li Donglin, the Chairman of Dynex and Executive Director and General Manager of Zhuzhou CSR Times Electric based upon the current market expectations, reiterated what he said last year, "Investments in the Chinese railway system have been temporarily slowed down. However, there is still a robust, long-term demand for the expansion of the Chinese national railway and urban metro systems. This development is still being sustained. We remain confident in the IGBT demand for the national railway and urban metro markets in the medium and longer term. Moreover, China is now accelerating the development of renewable energy from wind power and photovoltaic power generation. China is also increasing the construction of the smart electric grid. This will provides further strong demand for Dynex’s products."
Dynex's President and Chief Executive Officer, Dr. Paul Taylor commented, “We are pleased that in this difficult market we managed to stay on or above plan in 2011 and we expect that the first half of this year will unfold as we indicated to investors at our last AGM, maybe even with some improvement. The outlook for the second half of this year, however, is less clear. We have no compelling basis for lowering our expectations for the second half, but we remain prudently cautious about our prospects after June. Orders are coming in far later than normal. So, our ability to plan and to manage our business backlog is more challenging”.
Dr. Taylor continued, “As regards our main business focus in China, we continue to be very encouraged by our prospects in China over the medium and long term. In the near-term, the slowdown in rail investments is obviously troubling to our business in China. But, we expect the slowdown to be temporary, and it has triggered Dynex’s exploration of opportunities in other sectors including electric grid and industrial power conversion. We regard that as very healthy.”
Bob Lockwood, Chief Financial Officer, added, “We are pleased with the way the business is performing in such an uncertain market. Our margins had weakened during our recent capital expenditure program, but we are now seeing an improvement in our margins since that expansion finished in the second quarter of 2011. As we suggested at our AGM last June and in the Company’s releases since then, our 2011 results will represent a healthy improvement over 2010. We anticipate our markets being more difficult during the current year. Even though current performance is very encouraging, our ability to forecast becomes more difficult once you get beyond June and we are managing our expenses accordingly.”
In commenting on its expectations, the Company cautioned existing and potential shareholders about relying on the Company’s expectations in that the Company’s expectations contain forward looking statements and assumptions which are subject to the risks and uncertainties of the markets and the future, which could cause actual results to differ materially from expectations, and which are each difficult and subjective to forecast. Certain of those risks and uncertainties are discussed in the Management’s Discussion and Analysis for the quarter ended June 30th, 2011 and include, among other things, risks and uncertainties relating to: the level of worldwide demand for power semiconductors and power semiconductor assemblies; the level of investment in power electronic equipment, electrification of transport systems, alternative power generation and high quality power transmission and distribution; the worldwide demand for and supply of silicon; and fluctuations in exchange rates between Canadian Dollars, Sterling, US dollars and Euros. As a consequence of these and other risks and uncertainties, shareholders and potential investors must make their own independent judgments about the accuracy and reliability of the Company’s expectations. Dynex disclaims any intention or obligation to update or revise any forward looking statement whether as a result of new information, future events or otherwise.
For more information:
Dr. Paul Taylor
President and Chief Executive Officer
Finance Director and Chief Financial Officer
Dynex Power Inc.
Tel: +44 1522 500 500