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Customer caution drags on Cognex sales

01 Nov 2023

Machine vision firm's 2023 revenues will be well below recent years, despite the addition of high-spec optics from Moritex.

Cognex has reported sales of $197 million for the three months ending October 1, down 6 per cent on the same period last year, and warned of continued tough conditions - especially in China.

While the Massachusetts-based provider of machine vision technology remains highly profitable, and the latest quarterly figures were better than expected, its outlook for the rest of this year suggests that annual sales for 2023 will drop well below the billion-dollar level reported last year and for 2021.

CEO Robert Willett told an investor conference call that demand from the consumer electronics sector had declined steeply, adding:

“This was driven by both project timing and softer demand, particularly in China, where the underlying market remains cautious and customers are managing inventory to lower levels.

“We expect China to continue to be a challenging market for us and our peers in the near to medium term.”

And despite the global build-out of electric vehicle (EV) battery production - something that has become a key market for Cognex - Willett said that in China there was now an overcapacity, with investment there slowing as a result.

“I think we saw that coming, and I don't think that's a real surprise to us overall,” the CEO noted. “So I think a lot of the [future] capacity is going to be added by non-Chinese players, and outside of Asia.”

Moritex optical components
Willett also highlighted some of the thinking behind Cognex’s recent $275 million acquisition of the Japanese optical component manufacturer Moritex - a move that increases the US firm’s vertical integration, but may also impact sales of Moritex components to rival machine vision companies.

Explaining that vision technology relies on acquiring an image before analyzing it, the CEO said that Cognex has typically focused the majority of its research efforts on algorithm development, with its customers often using third-party lenses and lighting for image acquisition.

But over the past few years, Cognex has invested more in optics development, resulting in its own proprietary liquid lenses and more advanced illumination.

“Sophisticated optics allow us to capture images such as those of barcodes in a dark recess between two boxes on the logistics line, [or] those on the reflective surface of an electric vehicle battery,” Willett said.

“Moritex represents a bigger step into optics for us. Their products capture high-resolution, detailed images for their customers, who are some of the most sophisticated manufacturers of semiconductor, automotive, and electronics capital equipment.”

The deal also gives Cognex a more significant presence in Japan, where its share of the machine vision market has lagged that in other parts of the world.

Once it is fully integrated, Willett and his executive team expect Moritex to account for 6-8 per cent of total Cognex sales. In recent years, which have seen the firm post annual sales around the $1 billion mark, that would equate to something in the region of $70 million per year.

However, the 2023 total will be significantly below that posted in recent years. Cognex says that it is now expecting sales of between $175 million and $195 million in the closing quarter of the year, suggesting that the full-year figure will be around $825 million.

That would compare with totals of just over $1 billion in both 2022 and 2021.

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