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IPG grows 46 per cent thanks to demand in China; Coherent sales also up

Fibre laser manufacturer IPG Photonics has generated revenue of $369.4 million in the second quarter of 2017, a significant 46 per cent increase year-over-year. The results were driven by rapid growth in cutting and welding applications and exceptional performance in China, where sales almost doubled to account for half the company’s total quarterly revenue.

Meanwhile, Coherent posted third quarter net sales of $464.1 million, up from second quarter sales of $422.8 million. Net income was of $61.1 million, or $2.46 per diluted share. The results compare to net sales of $218.8 million and net income of $18.7 million for the third quarter of fiscal 2016, after Coherent completed its acquisition of Rofin-Sinar Technologies on 7 November 2016.

IPG's results showed that all of its main geographies except Japan experienced increases in sales by the end of the quarter. High-power laser sales increased by 57 per cent, while sales of QCW lasers increased 82 per cent due to growth in consumer electronics production and percussion hole drilling.

‘IPG delivered record quarterly results, driven by rapid growth in our core products, applications, and geographies,’ said IPG CEO Dr Valentin Gapontsev. ‘Demand for our core products, particularly high-power, kilowatt-scale fibre lasers, has never been stronger.’

During the quarter, IPG generated $82.3 million in cash from operations and used $21.8 million to finance capital expenditures. The company ended the quarter with $930.4 million in cash and cash equivalents and short-term investments, representing an increase of $99.8 million from 31 December 2016.

‘We are benefiting from accelerating adoption of fibre lasers over conventional lasers and non-laser cutting and welding equipment,’ continued Gapontsev. ‘Based on these trends and the strength of our current backlog, we believe we are in excellent position to deliver another strong quarter in three months.’

IPG Photonics expects revenue in the range of $350 million to $375 million for the third quarter of 2017. The company anticipates earnings per diluted share in the range of $1.70 to $1.90 based on 54,471,000 diluted common shares, which includes 53,380,000 basic common shares outstanding and 1,091,000 potentially dilutive options at 30 June 2017.

‘Year-to-date bookings have exceeded our expectations, pointing to strong revenue growth in 2017,’ said Gapontsev. ‘Based on first half outperformance and current backlog, we are now targeting approximately 32 per cent to 34 per cent revenue growth for the full year.’ This is significantly more than the expected 10-14 per cent growth originally forecast at the start of the year after the company reported annual sales in excess of $1 billion for the first time.

Given the magnitude of outperformance during the first half of the year, the company expects a lower growth rate in the fourth quarter because of more challenging comparisons and an expected slowdown in spending related to typical seasonality in China and the consumer electronics investment cycle.

‘Should this anticipated spending slowdown fail to materialise at a level consistent with historic trends, this could result in upside to our full year guidance range,’ concluded Gapontsev.

Coherent booked a significant number of large format ELA tools for OLED manufacturing, according to John Ambroseo, Coherent’s president and chief executive officer. ‘Utilisation within OLED fabs is very high and with more installations moving into the service pool, ELA service orders and revenues continue to climb,’ he said. ‘The outlook for FPD is bright with multiple new fabs having been announced or in the late stages of planning. These new fabs will drive business predominantly in FY19 and beyond.’

Coherent also had good traction during Q3 for high-power (1kW to 8kW) fibre lasers in battery welding for electric vehicles and metal cutting, Ambroseo added. ‘The pipeline is strong and outstrips our current capacity, which necessitates expansions in our diode packaging and fibre laser integration and testing operations. The additional capacity will be staged over the next year,’ he said.

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