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SPI's 2006 revenue hits £7m - double that of 2005

17 Jan 2007

SPI Laser reports improved revenue for 2006. On the back of booming sales of more powerful fiber lasers, 2007 could see sales reach £20 million. optics.org interviews David Parker, CEO.

SPI Lasers (SPI) has announced revenue figures of GBP 7 million ($13.8 million) for the year 2006, which represents 100% growth on 2005's revenue.

The figures were revealed in a trading update on January 9, published ahead of the company's preliminary results due on March 9.

As well as the fixed orders of over $2 million announced in November 2006, SPI has received further orders totaling over $6 million in the medical, marking and micron scale (micro) sectors.

In Q4 2006 the company began shipping its new 200 W fiber lasers intended specifically for micro applications and it is anticipating further revenue growth in this sector.

During the whole of 2006, order inflow was strong across SPI's product portfolio. The company entered new market verticals such as diamond processing and power cells. Its prospects are underpinned by a growing order book and product pipeline.

In a separate assessment of SPI, Panmure Gordon, which acts as corporate broker and adviser to the company, forecasts that the specialty fiber and laser manufacturer could see revenues rise to £20 million during 2007.

"It is encouraging that SPI's visibility is building," Panmure Gordon stated. "£3 million is already on the order book for Q107 and more than £5 million for H107 (compared to £4 million in H206). This bodes well for 2007, and supports our £20 million forecast for the coming year."

Panmure Gordon cautioned that due to the expansion of SPI's business, operating costs are increasing, which is perhaps unsurprising as the firm expands and establishes itself in the US and Asia. This will take about £3 million off its projections for the next two years.

SPI's expected loss before tax will therefore widen in 2006 from £10 million to £11.1 million and in 2007 from £2.7 million to £6.3 million. However, the business is set to break even by the end of 2007 and 2008 should be a full year of profitability, with a pre-tax profit forecast of £3.2 million.

optics.org interviews David Parker, CEO, about SPI's prospects and fiber lasers

optics.org: How did SPI manage to double revenues in 2006?

David Parker: In 2006 we further expanded the markets we entered in 2005 and we added some new vertical sectors. We also increased our fiber lasers' output power to 200 W, which made a significant impact on our Q4 revenue. At the start of 2007 we feel we are only at the beginning of the sales period for 200 W lasers.

o.o: Which are the key markets for SPI's fibers and lasers?

Our fiber lasers are used in diverse marking applications from electronics packages; keypads to dashboard controls. The micro applications are in cutting and welding of workpieces measuring between 100 µm to several millimetres. This covers components such as stents for opening veins and arteries, other medical devices, non-invasive surgery equipment, fine small parts for automotive applications, foil cutting for electronics applications, engraving of print rollers for traditional printing, 3-D rapid prototyping and sintering.

o.o: What about the potential of larger scale "macro" applications?

In the macro region of fiber laser applications, IPG Photonics is currently stronger than SPI but increasingly we will be looking at that area in the coming months and years.

o.o: What is your growth plan for the coming year?

Our pulsed lasers can achieve peak powers of 10 to 15 kW and we have doubled our CW output to 200 W. The latter is helping us to penetrate new markets such as in the manufacture of power cells and in the diamond [refining] industry.

As we move into 2008 we will utilise the power scaling capability that we have and target the macro market, becoming more competitive with higher power fiber laser makers, such as IPG Photonics.

o.o: What design improvements have you made?

We now have the ability to scale the power up - in terms of getting more pump energy into the fiber. But more important than that is our ability to scale the power handling of the fiber itself. A typical problem in this area of high power performance is the photo darkening of the fiber. We have solved this problem so we believe that we have a strong leadership position.

Solving the photo-darkening problem is pivotally important before you can scale the output power up from 200 W. Taking up the power is not really the key issue: it's more about where we want to position SPI in these markets.

o.o: Why are fiber lasers improving their position in the wider laser market?

In terms of brightness, intensity and beam quality, fiber lasers have parametric advantages over other types of source. For example, there are no thermal lensing effects. Also, fiber lasers are more stable in long term operation and in terms of dynamic stability. Because all of their elements are basically plumbed together, there are no moving parts or alignment issues. Thus fiber lasers need much less maintenance, which means that it reduces machine downtime.

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