Dynex Power Announces Year End Results for 2009
Lincoln, England, April 19th, 2010 – Dynex Power Inc., a leading, high power semiconductor company, today announced results for the year ended December 31st, 2009.
Revenue growth of 8% in 2009 was achieved against a difficult economic climate in many of the world's major economies. The growth reflected continued strong demand in the market place for Dynex bipolar discrete products and power electronic assemblies, offset in part by a weaker market for power modules and integrated circuits.
The 2009 gross margin of 23.9% was below the 28.3% reported last year. The 2008 level had been boosted by a particularly favourable product mix in the first half of the year which had not been expected to be repeated. The 2009 gross margin percentage was ahead of the levels reported in the years prior to 2008.
The Company reduced expenses by 13% compared to 2008. There had been significant one-off costs in 2008 associated with the acquisition of a majority stake in the Company by CSR Times Electric. Nevertheless, expenses have now fallen to 14.5% of revenue, the lowest ratio ever achieved and less than half what it had been five years previously.
As a result of these improvements in efficiency, the Company generated earnings before other income (expenses) and income taxes of $3.75 million, which was less than 2% below the figure reported in 2008, despite a much more challenging external environment.
An income tax charge of $0.4 million, following the exhaustion of UK tax losses, resulted in net earnings of $3.4 million.
Weaker economic markets saw order in-take decline from $49.0 million last year to $33.9 million this year, giving a book to bill ratio of 0.85. Nevertheless, the Company still had a strong order book at the end of 2009 of $31.4 million which represents 41 weeks of sales at the current revenue level. The decline reflected not only the softer market now being experienced but also the cancellation of over-bookings last year by some customers and the strength of the Dollar against Sterling, the Euro and the US Dollar in which all bookings are recorded. The strength of the order book enables management to remain confident that modest growth in revenue can be achieved in 2010.
As has previously been reported, Dynex is currently undertaking a major expansion of its facilities to enable it to benefit from the strong demand for power modules in China. The project will continue throughout 2010. The dislocation caused by this expansion, together with the impact of the additional costs of establishing the line before it can generate revenue, means that net earnings are expected to decline in 2010. However, strong growth in both revenue and net earnings is expected to result from the expansion, beginning in early 2011.
Dr. Paul Taylor, President and Chief Executive Officer commented, "The Company's results were much as expected. It is pleasing to be able to report that the business maintained the level of earnings before other income (expenses) and income taxes at a time when the external environment was providing many challenges to business. We were particularly pleased with the expense to revenue ratio achieved in 2009, although it is always disappointing to have to report a reduction in net earnings. We therefore consider our first full year as part of the CSR Group to have been very successful and we continue to see many new opportunities within the Group and in China generally from which we can benefit. We have completed the installation of a 6 inch bipolar fabrication facility and made significant progress on the expansion of our IGBT facility. The first of the two new lines is now being commissioned and we are starting on the installation of the second new line. The next year will be very challenging with a more difficult external market and with the costs of the new lines and preparing for major growth but with the extra revenue from that growth only coming through in 2011."
Bob Lockwood, Chief Financial Officer commented, "In the current environment, this is another outstanding set of results.. The strength of our order book means that we expect revenue in 2010 to be similar to that reported in 2009 despite a softer market. The expansion plans that Paul Taylor has referred to and our relationship with CSR Times Electric all point to an exciting future. The next year will be one of preparing for the expected growth in 2011 and beyond. The cost of that preparation and the move to a full tax charge in the UK means that our net earnings will be reduced. However, it is important to note that because we can defer this tax charge, it will not affect our cash flow."
Mr Lu, Chairman of Dynex and Vice General Manager of CSR Zhuzhou Electric Locomotive Research Institute Co., Ltd, the parent of CSR Times Electric, concluded, "CSR Times Electric is delighted with the progress that Dynex has achieved in the last year. We continue to identify exciting new opportunities for both CSR Times Electric and Dynex from our new relationship. The management of Dynex has delivered another set of excellent results and together we are laying the foundations for strong growth from 2011 onwards."