Edinburgh-based Wolfson Microelectronics (WLF) could only narrow its losses slightly as the audio chipmaker looks set to end the year in the red for a fifth consecutive time.
Investors and analysts alike began 2013 with high hopes after Wolfson recorded 59 per cent revenue growth year on year in the first quarter due to soaring mobile audio chip demand. But "lower-than-expected end-product sell-through at some major customers" in the second quarter, namely at key customer Samsung (which accounted for 62 per cent of revenues in the previous quarter), saw revenue growth slump to 13 per cent. Worse, chief executive Mike Hickey expects this trend "to continue to impact revenues over the next few months…" before sales resume a stronger upward trajectory in the fourth quarter or 2014.
Meanwhile, gross margins fell to 41.7 per cent in the first half from 48.7 per cent a year ago, as Samsung switches focus from high-end to low- and mid-market smartphones which do not have the same requirements for audio chips. Management expects margins to improve to 44 per cent in the third quarter, however, in part due to rising MEMS microphone sales.
Broker Peel Hunt forecasts an adjusted pre-tax loss of $1.3m and EPS of -0.9¢ for 2013, with profits of $8.4m and EPS of 5.9¢ in 2014 (from a loss of $2.9m and a loss per share of 1.9¢ in 2012).
WOLFSON MICROELECTRONICS (WLF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 146p | MARKET VALUE: | £170.4m | |
| TOUCH: | 145-146p | 12-MONTH HIGH: | 233p | LOW: 136p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 111¢* | NET CASH: | $29.8m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012** | 70.6 | -11.1 | -7.17 | nil |
| 2013 | 93.5 | -8.80 | -6.04 | nil |
| % change | +32 | - | - | - |
£1=$1.53 *Includes intangible assets of $32.6m, or 28¢ a share **Restated results for period from 2 January 2012 to 1 July 2012 | ||||
