IQE on track to achieve full-year expectations

IQE expects to deliver a significant increase in revenues and profits for the first half of 2016 compared to the same period a year ago as it continues to diversify its revenues.

In a trading update for the six months ended 30 June, the compound semiconductor specialist said sales in the first half are likely to be at least 15% higher than in the same period last year.

It said the photonics business continues to grow rapidly and is expected to deliver a double-digit rate of growth in the first half as Vertical Cavity Lasers and Indium Phosphide Lasers are increasingly adopted for a wide range of end market applications.

License income from joint ventures is expected to be around £3.5m for the half year, with both joint ventures making good progress, while Wireless and InfraRed sales are likely to show a slight year-on-year increase.

The company, which remains confident of achieving its full-year expectations, said it has made good progress on new product development and qualifications during the half, strengthening its IP position, and re-enforcing a positive outlook.

IQE said the depreciation of sterling against the dollar in the aftermath of the UK’s decision to leave the European Union had a limited impact on the half-year results, as the referendum occurred shortly before the end of the half year.

Aside from the impact of currency fluctuations, it does not expect to see any material impact from Brexit.

Chief executive Drew Nelson said: “The growth in IQE's sales and profits reflects the increasing diversification of its revenues, the growing breadth of its end markets, and the strength of its IP portfolio.

“As a result, the group's strong cash generation continues to de-leverage its balance sheet, with the deferred consideration from previous acquisitions on track to be completely eliminated by the end of September.”

At 1126 BST, IQE shares were up 15% to 20.44p.