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Integrated Micro-Electronics incurs loss

LISTED Integrated Micro-Electronics, Inc. (IMI) incurred a net loss for the third quarter on the back of lower revenues and slower demand for electronics.

In a regulatory filing on Tuesday, the electronics manufacturing arm of Ayala Corp. said it logged a $1.6 million attributable net loss for the July-to-September period, a reversal of its $806,000 net income in the same period last year.

“Third quarter net loss is at $1.6 million which still includes losses from STI Enterprises Ltd. as IMI worked on closing the divestment transaction with Rcapital,” the company said.

IMI also posted a 3% drop in its third-quarter revenues to $341 million.

“The drop in demand is largely driven by a general slowdown across the electronics industry with companies tightening working capital levels amidst excess inventory in the supply chain,” IMI said.

According to IMI, its wholly owned subsidiaries ended the third quarter with a $1.9 million net income, down 50% from $3.8 million last year.

“Major contributors to this drop are a $1 million inventory provision in the third quarter and a $0.9 million increase in interest expense compared to 2022. Management teams will continue to closely monitor inventory levels to mitigate our exposure and accelerate cash conversion,” IMI said.

IMI added that its non-wholly owned subsidiaries logged a $3.5 million net loss in the third quarter.

Meanwhile, IMI said its nine-month attributable net loss widened to $85.26 million from the $4.71 million attributable net loss in the same period last year.

The company’s revenues as of September dropped 0.9% to $1.03 billion from $1.04 billion a year ago.

IMI announced in August that it had agreed to sell 80% of STI, along with the remaining 20% held by minority stockholders, to London-based private investment company Rcapital amid supply chain issues and various issues such as the pandemic.

In April 2017, IMI announced that it had acquired an 80% stake in STI as part of a move to expand into the aerospace and defense markets.

IMI President Jerome S. Tan said the financial results of STI will not be consolidated into IMI figures starting Nov. 1, and the capital dedicated to supporting STI will be redistributed to “enable growth in our profitable business segments.”

 “With the recent closing of the sale of STI to Rcapital at the end of October, our management teams will be able to refocus efforts into improving margins for the core businesses and concentrate on sharpening our customer portfolio,” Mr. Tan said.

Meanwhile, Mr. Tan said IMI’s sales pipeline activity has $247 million worth of annual revenue potential across all segments secured in the first nine months of 2023, up 50% against the same period last year of $165 million.

“New mobility project wins from the past few years have begun to contribute to the company, with the segment growing 12% compared to 2022… We are excited to bring in new projects from both existing and new customers which we believe will allow us to further increase profitability in our business,” Mr. Tan said.

“However, we remain prudent as industry-wide uncertainties continue to affect customer forecasts and high levels of inventory in the electronics market have led to increased financing expenses,” he added.

IMI, the manufacturing arm of AC Industrial Technology Holdings, Inc., is a wholly owned subsidiary of Ayala Corp. The company produces electronics for various markets such as automotive, industrial electronics, and aerospace.

On Tuesday, shares of IMI at the local bourse rose one centavo or 0.29% to P3.40 each. — Revin Mikhael D. Ochave

Neil Banzuelo

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