Elmos Semiconductor AG increased its first-quarter sales by 3.3 percent from last year. The German manufacturer, which specializes in producing automotive components, also improved its adjusted cash flow from -€10.4 million ($-11.34 million) in Q1 2019 to €13.5 million ($14.72 million).
Though the mixed-signal solutions provider anticipates significant near-term headwinds, it has the attributes necessary to thrive in the medium-term.
Elmos Q1 Results
In the first three months of 2020, Elmos generated €64.2 million ($70 million) in sales, up from €62.2 million ($67.82 million). The firm also reported earnings before interest and taxes (EBIT) of €7.1 million ($7.74 million) and basic earnings per share (EPS) of €0.23 ($0.25). As such, the company experienced over 17 percent dips in net income and EPS.
Like semiconductor manufacturers, Elmos has had to adjust its operations in the wake of the coronavirus pandemic. In March, the firm revealed it implemented short-time schedules for its on-site staffers and transitioned other employees to remote work status. The company subsequently announced its executives and management board would take pay cuts to compensate for COVID-19 related declines in automotive component demand.
As such, Elmos ending the March period with 3.3 percent sales reflects its capacity to pivot in the face of unprecedented disruption successfully.
Taking the Long View
Elmos estimates gross income of between €50 million and €60 million in the second quarter with an EBIT margin of 1-6 percent. On an annual basis, the firm’s projections indicate a quarterly sales decrease of 26.6 or 20 percent. In a statement, CEO Dr. Anton Mindl explained his firm’s negative near-term income expectations are indicative of the coronavirus pandemic’s deleterious impact on worldwide vehicle demand.
Mindl said COVID-19 would hurt its sales throughout the rest of 2020.
Nevertheless, the executive maintained a positive outlook regarding Elmos’s medium-term prospects. He noted the firm’s high-level customer acquisition has continued in spite of pandemic prompted disruption. Mindl also said his company’s “strong financial position” would see it through its current challenges.
Automotive component companies ON Semiconductor and NXP Semiconductor both expect to experience contraction in the second quarter due to the global health crisis. However, both firms also predict demand will return once the worldwide economy reopens and recovers. With its recent operational agility and wherewithal, Elmos showed it could also endure and overcome the current market difficulties.