Ayala unit turns around with $10-million profit in 2009

MANILA, Philippines - Ayala-led electronics manufacturing services (EMS) provider Integrated Micro-Electronics Inc. (IMI) ended 2009 in positive territory with a consolidated net income of $10 million, a reversal of the $17-million  net loss incurred a year earlier.

In a statement issued yesterday, IMI attributed the major turnaround in its financial performance to a gradual increase in revenues starting in the second half of 2009 and effective cost containment measures amid a tough business environment.

“2009 was a very challenging year for the entire electronics industry. The effects of the global economic downturn on our markets, which began in the second half of 2008, ensued in 2009. The EMS sector experienced lower volume requirements of the OEMs. In addition, there was a severe supply shortage of electronics components, as suppliers were cautious of excess inventory brought about by the market’s uncertain outlook,” said Arthur Tan, president and chief executive officer of IMI.

For her part, IMI chief finance officer and senior managing director Sherisa P. Nuesa said despite severe stresses on the global electronics industry, “we managed to record a respectable bottom line.”

“With the downturn, a number of players in the EMS industry posted negative to lackluster results. Our EBITDA (earnings before interest, taxes, depreciation and amortization) remained robust. Further,we continued to maintain a solid balance sheet securing comfortable liquidity and debt levels.”

IMI, however, reported a 10 percent drop in revenues to $395.5 million as it was only in the second half of the year that the business landscape began to improve.

As of end-December last year, IMI had a consolidated cash balance of $53.9 million, about the same level as in the previous year, despite making $22.8 million in bank debt repayments.

Tan said he expects the demand for electronic products to rise given an improving global economy. “With the global economy expected to improve gradually in 2010, we expect the demand for electronic products to increase even at a moderate rate. As their inventories stabilize, OEMs will be increasing their volume orders from EMS companies like IMI,” he said.

He pointed out that IMI’s solid track record with its OEM (original equipment manufacturers) customers, a global footprint, and a robust financial position would enable the company to capitalize on the uptrend in electronics. “We will gravitate toward high-growth, high-margin product niches to continue on our path of sustainable growth and profitability. We are positioning in key growth niches within the automotive, industrial and renewable energy markets while probing into other non-traditional markets that could provide synergistic out-of-the-box business solutions,” Tan said.

IMI has transformed its operations in the Philippines into a worldwide network that includes a subsidiary (Speedy-Tech Electronics Ltd.) with manufacturing plants and engineering centers in China and Singapore; an advanced manufacturing engineering and new product introduction center in the United States; and sales offices in Japan, China, Singapore, the United States and Germany.