Investment Bridge Announces Investment Opinion: Bridge Report on Ferrotec Corporation: Large Loss Incurred in FY3/13 on Weak Market Conditions, Earnings Recovery Expected in FY3/14

Investment Bridge, one of Japan's leading IR services companies, has issued a "Bridge Report" on Ferrotec Corporation (JASDAQ:6890) reviewing its FY3/13 earnings results and FY3/14 earnings estimates.

Report Highlights

• Sales fell by 36.1% year-over-year to JPY38.4 billion and an operating loss of JPY3.6 billion was recorded due to difficult operating conditions of the photovoltaic cell panel makers during FY3/13.
• During FY3/14, sales are expected to grow by 9.3% year-over-year to JPY42.0 billion and operating income is expected to recover to a profit of JPY1.0 billion on the back of recoveries in sales of the equipment related and electronic device business segments.
• The Bridge Report calls attention to apparent bottoming in the difficult operating conditions encountered from FY3/12 onwards, and its earnest efforts to fortify its business and to implement proactive investor relations to restore investor confidence.

Ferrotec Corporation manufactures and sells single and multi crystal silicon ingot manufacturing equipment and other products in the photovoltaic related segment. Ferrotec also supplies various parts, consumables and equipments for semiconductor, flat panel display (FPD), and LED applications in equipment related segment, and various thermoelectric temperature controllers for automobile seat and home appliances in electronic device segment.

Difficult operating conditions that arose during FY3/12 continued to impact earnings in FY3/13 and led to a 36.1% year-over-year decline in sales to JPY38.4 billion and an operating loss of JPY3.6 billion. Weakness of the photovoltaic cell panel makers contributed to a large 54.9% year-over-year decline in photovoltaic related business segment sales. Also, declines in capital investments and production of the semiconductor and FPD industries contributed to 24.2% fall in equipment related business segment sales, and weak demand for thermoelectric modules led to a 14.5% year-over-year decline in electronic device business segment sales.

During FY3/14, difficulties in the silicon crystal manufacturing equipment are expected to contribute to a 9.5% year-over-year decline in photovoltaic related business sales, but investments for miniaturization of semiconductors and for mobile applications of FPDs are expected to boost sales of the equipment related business by 18.2% year-over-year and increases in demand for thermoelectric modules on the back of recoveries in consumer products are expected to allow electronic devices business sales to rise by 15.8% year-over-year. Consequently, total consolidated sales are expected to rise by 9.3% year-over-year to JPY42.0 billion. Furthermore, the disappearance of unprofitable business and cost reductions are expected to allow operating income to improve to a profit of JPY1.0 billion.

The Bridge Report notes that while difficult conditions have been encountered from the second quarter of FY3/12, the near term business environment appears to have bottomed and progress has been made in Ferrtoec's business restructuring plan during FY3/13. The Report also notes that the Company's earnest efforts to fortify its businesses and implement proactive investor relations may take little time before investor confidence is restored.

To view the full report, please go to the website at the URL listed below.
http://www.bridge-salon.jp/report_bridge/archives/eng/6890/20130709.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.