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LPKF makes a strong start to 2013
TUALATIN, OR – 
Specialty mechanical engineering company LPKF has made an excellent start to the 2013 financial year. The Group, which today published its first quarterly financial report for 2013, posted revenue of EUR 33 million, a more than 60 percent increase on the same quarter last year.

The positive trend in revenue was also reflected in terms of earnings:  At around EUR 7 million, earnings before interest and taxes (EBIT) rose 200 percent year on year. The EBIT margin was 20% (previous year: 11%).

A key reason for the positive EBIT trend was the strong performance of business with systems for laser direct structuring (LDS), a technology that has so far been used mainly in the manufacture of antennas for smartphones, laptops and tablet PCs. In recent months, an increasing number of systems were ordered by Asian customers.

The company had to accept a setback in litigation involving the defense of the LDS patent in China. The Chinese Patent Office had declared the LDS patent invalid in May 2012. This ruling has now been upheld by a Chinese appellate court. LPKF believes that the decision in the case is incorrect and is investigating further remedies that would allow the proceedings to be reopened. The loss of the patent in China would make producing and selling counterfeit LDS components legal within China. However, by far the majority of the LDS components manufactured in China are exported to countries in which LPKF continues to have unbroken LDS patent protection. This means that both currently and going forward, only original LDS components can legally be exported outside of China. LPKF will continue to work to protect the LDS patent outside of China and will litigate patent infringement.  

Alongside LDS, the other segments also contributed to the positive development of business. Without exception, all three segments have started the new year with sales growth of more than 20%. In the first three months, the Group’s workforce rose from 690 to 706 employees.
Laser technology continues to displace other systems for the production of particularly small and sensitive components. More and more LPKF machinery (Welding Equipment) is being deployed for plastics joining applications. Based in Erlangen, this product group has seen strong growth for a number of years while also further improving profitability in 2012. Revenue growth has been hindered solely by capacity bottlenecks at the site. This should be resolved in the current financial year by relocation to larger production and office facilities. This investment has a volume of around EUR 14 million.

The strong revenue in the first quarter of 2013 was due in part to a large order from the solar industry, which will be completed as planned by mid-2014. In view of the continuing weakness of the solar market, LPKF is preparing for a decline in revenue in the Solar Equipment product group in the current year and therefore expects a temporary slowdown in the development of consolidated revenue for 2013. Added to this is low visibility in other product groups with the exception of Welding Equipment.

On the whole, the Management Board confirms the forecast it made in November of 2012 and expects the LPKF Group to generate revenue of EUR 115 to EUR 120 million for 2013 assuming stable performance by the global economy. Revenue growth is planned for all segments outside the solar energy business. The EBIT margin should be between 15% and 16% in 2013.The Management Board expects a stable economic environment in both 2014 and 2015, with revenue growth of 10% per year on average and a slight increase in the EBIT margin.
The company’s strong growth has also been reflected in the capital market, with the result that the share price has now risen above the EUR 20 mark for the first time in many years. In view of the highly positive development of operations in 2012 and the good prospects for the current financial year, the Management Board and the Supervisory Board intend to propose to the Annual General Meeting on 23 May 2013 that a dividend of EUR 0.50 per share be paid.
 
The full quarterly report is available in German at
www.lpkf.de/investor-relations/finanzberichte/index.htm and in English at www.lpkf.com/investor-relations/financial-reports/index.htm.

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