Dynex Power Announces First Quarter Results for 2011
Lincoln, England, June 1st, 2011 - Dynex Power Inc., a leading, high power semiconductor company, today announced results for the quarter ended March 31st, 2011.
Summary financial information for the three months ended March 31st, 2011 is as follows:
First quarter revenue of $7.6 million was 27% lower than the corresponding quarter of last year. The reduction was a result of the disruption caused by the expansion project, a significant decline in sales of bipolar devices and power electronic assemblies in Europe and a 5% reduction in the Sterling / Canadian Dollar exchange rate, partially offset by improved sales of modules and integrated circuits.
The gross margin of 19.7% was below the 24.4% reported in the corresponding quarter of last year. The decline was attributable to the revenue reduction, the impact of the depreciation charge on new equipment before it was generating revenue, the additional costs of testing the new production lines and the impact of construction work on the yields of the old module fabrication line.
Other income, expenses and costs of $1.2 million were 18% lower than in the corresponding quarter of last year. The reduction was a result of careful control of administrative costs and the reduction in the research and development cost borne by the Company following the joint funding agreement with CSR Times Electric.
As a consequence of these changes, the Company generated a profit before tax of $310,000, compared to $1.1 million in the corresponding quarter of last year. A reduction in the UK tax rate and the lower profit before tax figure meant that the income tax expense declined by 74% to $94,000.
A book to bill ratio of 1.4 in the first quarter of 2011, the first time bookings had exceeded billings for 2 years, provided tangible evidence that the markets for the Company’s products are recovering.
In respect of the expansion project, the two new 6 inch IGBT fabrication lines have now been installed and the old 4-inch line has been decommissioned. The first new line is fully operational and the second line is being ramped up. The expansion project has been completed on time and on budget.
Dr. Paul Taylor, President and Chief Executive Officer commented, “The first quarter of 2011 has been a difficult one for the Company. Whilst we understand the reasons for the results and we are confident of the strength in the second half of 2011, management was not satisfied with the performance in the first quarter. Demand for our products, particularly in Europe, was weak and we were also impacted by the disruption and additional costs of the expansion project. However, I am pleased to say that we are seeing clear signs of recovery in demand and that we have now successfully completed the IGBT fabrication expansion project. Whilst the recovery in demand and the completion of the expansion project will not significantly impact on the second quarter due to lead times, we expect revenues and profit to recover strongly thereafter. Equally important to our long-term prospects is the work being carried out in our research and development centre in conjunction with CSR Times Electric who provide 80% of the funding for the centre. I am pleased to report that the centre has been operating successfully since late 2010.”
Bob Lockwood, Chief Financial Officer commented, “The soft market for our products over the last two years, particularly in Europe, and the additional costs and disruption caused by the expansion project, particularly over the last three to six months, have made this first quarter of 2011 very difficult. Against this background, it is pleasing to report that the Company maintained profitability and that our balance sheet remains strong. We are now poised for strong growth in revenue and a recovery in profitability. The long lead time in high power semiconductors means that it will be the third quarter of 2011 rather than the second quarter before these improvements show clearly in our reported results.”
Li Donglin, the Chairman of Dynex said, “The last few quarters have been difficult for Dynex. CSR Times Electric, like other shareholders, has had to be patient whilst the Company laid the foundations for future growth. The wait is nearly over and we expect to see the results of that investment reflected in the income statement in the second half of the year.”
For more information:
Dr. Paul Taylor
President and Chief Executive Officer
Finance Director and Chief Financial Officer
Dynex Power Inc.
Tel: UK +44 1522 500 500