Geopolitical uncertainties, including the US-China trade war and the political tension in the UK, have gnawed sharply at the profitability of Ayala-led electronic manufacturing services arm Integrated Micro-Electronics Inc. (IMI).
In the first nine months, IMI posted $451,000 in net profit, a sharp decline from the $41.3-million profit in the same period last year. This year’s bottom line included a provision for nonrecurring deferred expenses of $5.2 million.
Consolidated revenue from January to September fell by 7 percent year-on-year to $939.6 million, which IMI attributed to the persistent slowdown in its main market segments, compounded by various geopolitical issues.
In a disclosure to the Philippine Stock Exchange, IMI said a lingering contraction in the automotive space, particularly in China, brought down customer demand forecasts that led to shrinking margins as new manufacturing lines were temporarily underutilized.
Gross profit reached $79.1 million, representing an 8.4-percent margin that marked a 26-percent fall from a year ago.
IMI’s wholly owned businesses recorded $755.2 million of nine-month revenue, down 3 percent from year-ago level. China turned out to be the biggest drag, with IMI factories in the region showing a 22-percent decline from level in the same period in 2018.
Despite the global slowdown, IMI’s Mexico and Bulgaria/Serbia operations showed growth of 66 percent and 3 percent, respectively.
Meanwhile, Germany-based Via Optronics and UK-based STI Enterprises Ltd. posted $184.4 million in revenue, down 20 percent year-on-year.
Delays in the production of next generation computer processors affected VIA’s consumer laptop business. IMI said the company, however, remained committed to serve the market while anticipating a market rebound and rollout of new products by the end of the year.