IMI’s facility in Jiaxing, China
Ayala-led electronics manufacturer Integrated Micro-Electronics Inc. (IMI) turned unprofitable in 2019 as a slowing global economy gnawed on sales volume and margins.
Net loss attributable to equity holders of the parent company amounted to $7.78 million in 2019, a reversal of the $47.19 million net profit in the previous year.
A softer fourth quarter operating performance plus additional reserves – including inventory and other provisions of $5.3 million and valuation reserve on deferred tax assets of about $2.8 million – resulted in the full-year net loss.
Revenues for the year softened by 7 percent to $1.23 billion as a slowdown in global markets curbed revenue growth across majority of IMI’s operating units, IMI disclosed to the Philippine Stock Exchange on Wednesday.
Significant investments in capacity and technical capabilities for growth areas also increased company overhead expenditures, eroding gross profit margins to 8.2 percent versus the 2018 margin of 10 percent.
“Despite the continuing decline of the market environment, we are resolute in setting the bar to key technological advancements and remain ahead of the curve. With our resilience, along with our technical expertise and commitment to quality manufacturing, I’m confident that we shall continue to win significant businesses in emerging technology platforms. As the adoption of these new products begins to accelerate, we will relentlessly take the necessary steps to achieve sustainable returns as we pull through this current market situation,” IMI chief executive officer Arthur Tan said in a press statement.
In 2019, IMI bagged new business deals with $407 million worth of annual revenue potential across all IMI electronic manufacturing service facilities.
The Asian business contracted by 11 percent as China’s domestic market, particularly in the automotive space, continued to underperform.
IMI Europe, which is largely automotive-based, achieved a 3 percent growth year-on-year through the company’s newest production facility in Serbia despite the widespread industry slowdown and the Euro depreciation.
Mexico, which serves the US market, sustained a strong trajectory with a 50 percent revenue growth in 2019.
On the other hand, German unit Via Optronics and UK-based unit STI Ltd. posted combined revenues of $248 million, a decline of 21 percent from the previous year. The drop in VIA was mainly driven by the slump in the computing consumer segment and the delay in the release of the new generation Intel chip.
Meanwhile, uncertainty from Brexit – referring to Great Britain’s much-ballyhooed exit from the European Union – caused the delays in STI’s program awards. STI, however, continues to have a strong pipeline of new contracts amounting to $124 million in 2019.