Dynex Reports Strong Recovery in Revenues and Profits
Lincoln, England, August 11th, 2011 – Dynex Power Inc., a leading specialist high power semiconductor company, today announced its results for the second quarter of 2011.
Summary financial information in Canadian dollars for the three and six months ended June 30th, 2011 is as follows:
Revenue in the second quarter of 2011 was 2% lower than the corresponding quarter of last year but showed growth relative to recently reported results. Revenues from the Power Modules Group were at an all-time record as a result of the new lines now supplying die to CSR Times Electric. Good revenue was also experienced by the Integrated Circuits product group. Revenue from the Bipolar Discrete and the Power Electronic Assemblies groups reflected the continuing soft market for high power bipolar products.
Year-to-date revenue was 16% lower than in the same six-month period last year. This is almost entirely accounted for by the weak first quarter of 2011 compared to the first quarter of 2010. Here again, there was good performances from the Power Modules and Integrated Circuits product groups, which was more than offset by soft demand for the products of the Bipolar Discrete and Power Electronic Assemblies product groups.
The gross profit margin for the second quarter of 2011 was 21.4% compared to 20.5% in the corresponding quarter of 2010. The year-to-date gross profit margin was 20.7% compared to 22.6% last year. The gross margins in the first half of 2011 were higher than those reported for the full year in 2010 and represent a return to the range of gross margins achieved in the past prior to the commencement of the disruptive construction.
Dynex reported profit before tax of $0.8 million in the quarter and $1.1 million for the year-to-date, compared to $0.5 million for the second quarter and $1.6 million for the year-to-date in 2010. Management believes the improved performance in the second quarter will be maintained in the second half of 2011.
The book-to-bill ratio was 1.3 during the second quarter and was also 1.3 for the year-to-date, providing a good indication of improving demand for the Company’s products. The order book stood at $22.0 million at the end of June, $2.2 million higher than it had been at the end of the first quarter and $5.2 million higher than it had been at the end of 2010.
Following the exhaustion of UK tax losses last year, tax has been provided for on UK earnings at the statutory tax rate of 26%. The Company will be able to defer most of this tax charge. As a result, no major tax payments are expected to be made in the UK this year.
Dr Paul Taylor, President and Chief Executive Officer said, “We are delighted that the installation of the two new 6 inch IGBT lines has been completed on time and on budget. The lines are now being ramped-up successfully. This has led to record revenues from power module and IGBT die sales, with CSR Times Electric as our major customer. The strength of this sector, together with good sales from our diminishing stocks of integrated circuits, has allowed us to report good results despite the weakness in the bipolar discrete and power electronic assembly product groups. There are signs that these areas are beginning to recover from a prolonged period of weak demand, which should help further boost our results in the second half of the year.”
Bob Lockwood, Chief Financial Officer, added, “We were pleased with the recovery in our gross profit in the second quarter, particularly given that demand in some high voltage bipolar sectors remains soft. We have continued to keep overhead costs under control and, as a result, our profit before tax in the quarter has exceeded the levels of recent quarters. Looking forward, revenue is expected to continue at levels similar to or above those seen in the second quarter. As volumes grow and we get the full benefit of having finished the disruption of our capital expenditure program, we expect to see continued improvement in our gross profit. This should enable the business to continue reporting good profits for the balance of the year.”
Li Donglin, Chairman of Dynex and General Manager of CSR Times Electric, said, “The development of the Dynex business to be a major supplier to CSR Times Electric is progressing well. The railway field trials of Dynex products are running smoothly in China on metro and locomotive vehicles, but there is still much to do to complete this work successfully. Also, through our joint funding of the R&D Centre, we expect Dynex to accelerate the development of both IGBT and bipolar products, which will give the business access to wider market opportunities in not only railway, but also electric vehicle, renewable energy and electric grid markets. I remain pleased with the progress made and look forward to further improvements in financial performance in the coming quarters.”
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: UK +44 1522 500 500