Bridge Report on Ferrotec Corporation: Steady First Half Earnings, Full Year FY3/16 Estimates Call for Strong Earnings Growth

Investment Bridge, one of Japan’s leading IR services companies, has issued a "Bridge Report” on Ferrotec Corporation (JASDAQ: 6890) reviewing its earnings results for the first half of fiscal year March 2016 and its full year estimates.

Report Highlights

• Sales and ordinary income during the first half of fiscal year March 2016 rose by 15.0% and 62.0% year-on-year respectively.
• Ferrotec’s full year estimates call for increases in sales and ordinary income of 11.7% and 103.5% year-on-year respectively.
• Ferrotec seeks to achieve its goals of ¥100.0 billion in sales and 8% operating income margin (A longer term target of 10%) at an early stage.

Ferrotec Corporation manufactures and sells silicon single and multiple crystal manufacturing equipment and other products in the photovoltaic related products segment, semiconductor manufacturing equipment, flat panel display (FPD) manufacturing equipment parts, semiconductor materials, and various thermoelectric temperature controllers widely used in personal computers, cellular telephones, and devices using liquid crystal and plasma technologies.

Sales and operating income rose by 15.0% and 62.0% year-on-year during the first half of fiscal year March 2016. While sales of the photovoltaic related business declined by 13.9% year-on-year due to weak demand for silicon crystal manufacturing equipment and consumables, growth in demand for thermoelectric modules for consumer and industrial equipment in addition to for the mainstay product of automobile seat automated heating allowed sales of the electronic device business to rise by 55.3% year-on-year. Furthermore, sales of the equipment related business rose by 19.6% year-on-year on the back of demand for materials used in vacuum seals and semiconductor manufacturing processes.

Ferrotec’s full year earnings estimates call for growth in sales and operating income of 11.7% and 103.5% year-on-year. While these full year estimates were revised upward due to the favorable first half earnings performance, the second half estimates for sales and operating and ordinary incomes have been revised up by only a small margin due to uncertainties surrounding the future of semiconductor application related demand. Moreover, along with the recovery in sales of the photovoltaic related business, sales of all segments are expected to rise during the second half. A year-end dividend of ¥8 per share is expected to be paid.

The photovoltaic related business is now transitioning from a recovery phase to a growth phase along with the recovery in solar power related investments in China and the shift of production to the highly cost competitive Yinchuan Plant. At the same time, measures are being promoted, leveraging existing strengths and in view of new industrial trends in the electronic device and equipment related businesses. These measures include the cultivation of electricity-generating thermoelectric modules, provision of solutions through development of thermoelectric modules, and expansion of the high power device substrates business within the electronic device business. In the equipment related business, cultivation of CVD-SiC, expansion of silicon parts, cultivation of non-semiconductor applications for ceramic parts, development of 8-inch discrete wafers, and strengthening of equipment cleaning are being pursued. Ferrotec seeks to achieve its goals of ¥100.0 billion in sales and 8% operating income margin (A longer term target of 10%) at an early stage.

To view the full report, please go to the website at the URL listed below.
http://www.bridge-salon.jp/report_bridge/archives/eng/6890/20160209.html

About Bridge Report:
Bridge Report is produced by Investment Bridge Co., Ltd. and provides accurate and objective information about the earnings, business strategies, and other information of publicly traded Japanese companies. Investment Bridge was founded in August 2000 and is one of Japan’s leading independent IR support services companies. Investment Bridge specializes in providing various solutions to Japan’s publicly traded companies with the goal of expanding our clients’ shareholder base and liquidity through increased recognition and understanding of companies.

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