IMI income declined in H1

The slowdown in the global economy and downturn in the automotive market amid the US-China trade war and Brexit gnawed on the first semester earnings of Ayala-led electronics manufacturer Integrated Micro-Electronics Inc. (IMI)

IMI ended the first half with a $5.8-million net income, a steep decline compared to last year’s first half earnings of $31.6 million, the company disclosed to the Philippine Stock Exchange.

Consolidated revenues declined by 5 percent to $636 million in the first semester. IMI, however, was able to maintain its first quarter gross margin of 9 percent. Gross profit for the six-month period fell by 21 percent year-on-year to $57 million.

IMI was affected by lower volume demand on new programs where it had invested additional fixed overhead, the persistent component shortages which drove higher material prices, alongside the delays of new generation chipsets affecting Via Optronics, a German optical bonding and display solutions provider that was acquired by IMI in 2016.

IMI’s core businesses ended the first half with revenues at $506 million, down by $9 million from the same period in 2018. This segment was adversely affected by the slowdown of the Chinese automotive market as the region reduced its electronic vehicle incentive program.

A significant portion of core revenues through IMI’s Bulgaria and Czech Republic operating sites were also held back by the depreciation of the Euro against the US dollar.

Via Optronics and STI Ltd. posted revenues of $130 million, marking a 16-percent decline year-on-year. The demand for Via’s optical bonding services suffered a temporary slowdown as the release of new computer products were stalled by delays in the rollout of next generation computer chips. Uncertainities from Brexit—referring to Great Britain’s exit from the European Union—continued to drag down the STI business as the region evaluated the effects on tariff structures between the UK and the rest of Europe.

STI is a British electronics manufacturer acquired by IMI in 2017.

“With significant investments for new technology projects made in the past years, IMI remains ready to serve the upcoming surge in the global electronics market. Unfortunately, political and economic market factors are currently holding back the revenue growth, while also affecting the profitability of the company,” it said.

With the negative developments in the past several months, IMI has taken steps to mitigate these financial headwinds.

Arthur Tan, IMI chief executive officer, said: “Despite the challenges we’ve faced these recent months, we remain confident that we have positioned ourselves as a key player in the electronics supercycle.”  —DORIS DUMLAO-ABADILLA