CML Microsystems PLC Trading Update (7561O)
01 February 2019 - 6:00PM
UK Regulatory
TIDMCML
RNS Number : 7561O
CML Microsystems PLC
01 February 2019
01 February 2019
CML Microsystems Plc
Trading Update
CML Microsystems Plc (the "Company" or "Group"), which designs,
manufactures and markets semiconductors, primarily for global
communication and solid state storage markets, today issues the
following trading update:
Trading Update
In the Company's half year report announced on 20 November 2018,
we reported that it would be challenging for second half revenues
to show a material improvement over the first six-month period.
However, it was also reported that the effects on profitability
were expected to be less pronounced due to product mix and diligent
cost control. At that time, weaker automotive sales and extended
raw material supply chain lead times were just two of the market
dynamics combining to subdue progress.
Since the half year announcement, we have seen the tangible
effects of a softening of the Chinese economy along with on-going
geopolitical issues and can report that a number of our customers
have exhibited weaker demand and remain in an inventory correction
period. As a result, new order bookings have not met with internal
management expectations.
With only two months of the financial year remaining, the
Company now expects second half revenues to be below those achieved
during the first 6 months and full year revenues to be
approximately 12% lower than the prior 12-month period. Given the
expected sales performance, the Company therefore expects revenues
and profit before tax to be materially below current market
expectations. Gross margin has continued to track above last year
due to product mix and the cost base has remained stable.
Whilst this is disappointing to report, the Board believes that
medium to long term growth drivers for our products remain
particularly strong and we are focussed on driving the business
over this period and our strategy remains unchanged. We are
maintaining levels of investment in product R&D on the back of
many consecutive years of profitability. The growing product
portfolio and our expanded global sales coverage is driving the
value of our sales opportunity pipeline significantly higher.
Despite the challenges associated with current market dynamics, we
believe that the Company remains very well placed to benefit as
these external situations normalise.
A further update will be provided during early May in advance of
the full year results announcement on 11 June 2019.
The information contained within this announcement is deemed by
the Group to constitute inside information under the Market Abuse
Regulations (EU) No. 596/2014.
CML Microsystems Plc www.cmlmicroplc.com
Chris Gurry, Group Managing Tel: +44(0)1621 875 500
Director
Neil Pritchard, Group Financial
Director
Cenkos Securities plc Tel: +44(0)20 7397 8900
Max Hartley (Corporate Finance)
Russell Kerr (Sales)
SP Angel Corporate Finance Tel: +44(0)203 463 2260
LLP
Jeff Keating
Alma PR
Josh Royston Tel: +44 (0)7780 901979
Caroline Forde
Robyn Fisher
About CML Microsystems PLC
CML designs and develops semiconductors for the industrial
storage and communications markets. The Group utilises a
combination of in-house and outsourced manufacturing and has
trading operations in Europe, the Far East and USA. CML targets
niche markets with strong growth profiles and high barriers to
entry. It has secured a diverse, blue chip customer base, including
some of the world's leading telecoms equipment providers and
industrial product manufacturers.
The spread of its customers and products largely protects the
business from the cyclicality usually associated with the
semiconductor industry. Growth in its end markets is being driven
by factors such as the ever increasing trend towards solid state
storage devices in the commercial and industrial sectors, the
upgrading of telecoms infrastructure around the world and the
growing prevalence of private commercial communications networks
for voice and/or data communications linked to the industrial
internet of things (IIoT).
The Group is cash-generative, has no borrowings and is dividend
paying.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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