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IPG sees impact of US incentives

03 May 2023

Fiber laser giant says that customers are shifting investments to take advantage of IRA legislation.

IPG Photonics has posted sales of $347 million for the opening quarter of 2023, down 6 per cent year-on-year but a better result than the company’s executives had forecast in February.

CEO Eugene Scherbakov and his colleagues attributed that in part to record-breaking sales into electric vehicle (EV) battery production and for the firm’s handheld welding system, known as LightWeld.

Scherbakov also noted strong demand for lasers to be used in cleaning and solar cell production, thanks to increasing interest in renewable energy and eco-friendly manufacturing solutions like replacing acid etching of parts with laser cleaning.

“We are seeing customers accelerating investment in EV battery capacity in North America, Europe, Japan, and Korea, in addition to the investments being made in China,” the CEO told an investor conference call discussing the latest results, also pointing out the impact of recent legislation in the US:

“Our e-mobility business in the US has increased substantially in the first quarter as customers shifted investments into the region to take advantage of government incentives.”

Partly impacted by currency effects and the recent sale of its telecom division, the latest quarterly sales delivered a net income of $60 million, down from $70 million a year ago.

New medical opportunities
With a strong investment cycle expected to continue for the next five years in e-mobility, Scherbakov said that IPG was now working to diversify the applications of its lasers in EV production welding steps.

The firm is also looking to diversify its medical offering, where it has enjoyed recent success in a specific urological procedure with its thulium fiber sources replacing older holmium lasers.

IPG says that a major medical customer is now adjusting its inventory levels, meaning that medical sales will drop in the current quarter.

“We are working on multiple new opportunities to broaden our medical portfolio and to further grow the business so it becomes a more meaningful contributor to IPG sales in the next 2-3 years,” the CEO told investors.

Company CFO Tim Mammen added that sales of IPG’s high-power lasers dropped year-on-year because of continued weaker demand in cutting applications as well as stiff competition in China. However, the firm’s systems sales had jumped 20 per cent - partly due to the success of LightWeld.

In terms of geographical distribution, sales to China were down 22 per cent on the same period last year, with any rebound from recently relaxed Covid restrictions in the country yet to be seen.

“At the moment demand remains relatively muted, [and] the expected traction from a recovery is taking longer to really crystallize,” Mammen told investors when asked about the situation in China.

Looking ahead, the IPG management team indicated that sales in the second quarter should be in the region of $340 million, compared with $377 million for the same period in 2022.

• IPG’s stock price was largely unmoved immediately following the latest update, ticking up slightly to close at just under $120 on the Nasdaq on May 2. That figure translates to a market capitalization in the region of $5.7 billion.

CHROMA TECHNOLOGY CORP.Optikos Corporation Berkeley Nucleonics CorporationABTechMad City Labs, Inc.LASEROPTIK GmbHHyperion Optics
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