e2v sales down 9% as defense demand cools

11 Oct 2012

The high-reliability semiconductor and imaging component manufacturer is expanding in Asia, but restructuring in the UK.

e2v Technologies, the UK company that makes a range of semiconductor components including high-end imaging sensors, has confirmed that revenues in the first half of its current fiscal year will be below earlier expectations.

Like-for-like sales are now expected to be down 9% on the prior year, impacted by deferred orders from defense customers in both the US and UK – e2v’s key sectors. The firm had warned in July that markets had become “more challenging”, while the general slowdown in spending by the US Department of Defense had prompted the now-aborted merger talks between customers EADS and BAE Systems.

In a trading update published a month ahead of the company’s official results announcement, e2v’s management said that sales in the first half would likely total £90 million, down from £115 million in the prior year. However, when one-off sales and discontinued lines are taken into account, the like-for-like decline is only 9%.

“Expected revenue for the continuing business for the first half reflects the challenging external environment, with deferred orders for US and UK defense and lower intake in our commercial and industrial businesses,” e2v reported. “In space, technical challenges in the first quarter delayed the achievement of milestones, in addition to delayed order intake on one program.”

Despite the revenue fall, the company adds that it has been able to maintain profit margins thanks to implementing a more flexible operation – notably at its Grenoble, France, site.

“The staffing flexibility that we had established in our Grenoble business allowed us largely to accommodate the lower levels of activity, along with careful cost control in the US as we moved into the new facility in July, resulting in margins in line with our expectations despite the lower level of output,” stated the update, adding that these actions had reduced costs by some £5 million in the first half just completed.

However, chief executive Keith Attwood said that further restructuring was now being implemented, primarily at the Chelmsford, UK, facility that houses e2v’s RF power solutions division.

Machine vision demand softens
Within the firm’s high-performance imaging division, e2v noted that demand for sensors used in machine vision applications had softened, although this market did “show signs of steadying” in the second quarter.

The company’s new CMOS-based line-scan camera is said to be well positioned for inspection systems set to be used in future flat-panel display production, including for smaller consumer electronics devices.

But business from the scientific imaging sector is down on the comparable period last year. That mainly reflects lower end-user demand for existing product lines, although e2v said that its new 8 µm high-performance sensor for applications in life sciences had performed well, securing preliminary orders from major customers.

While e2v’s sensors have recently been launched on board the Astrium SPOT-6 surveillance satellite, and are used in the Mars Curiosity rover, sales for space imaging are also down on last year. This is partly the result of the “technical issues” that are said to have been resolved in the first quarter, and a recovery is now expected in the second half.

e2v has also now booked a large, multi-year order from the China Academy of Space Technology (CAST) that, while arriving later than initially planned, will also contribute to revenues in the remainder of the current fiscal year.

With the transfer to its new facility in the US now finished, e2v said that all production lines were now operational and that relevant qualifications had been completed. Expansion continues in China, with local manufacturing slated to begin within six months.