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Investment Bridge Announces Investment Opinion: Bridge Report on Ferrotec Corporation: Strong Recovery in FY3/14 Earnings, Estimates Call for Continued Earnings Growth in FY3/15

Investment Bridge, one of Japan’s leading IR services companies, has issued a “Bridge Report” on Ferrotec Corporation (JASDAQ:6890) reviewing its earnings results fiscal year March 2014 and estimates for fiscal year March 2015.

Report Highlights

  • Sales rose 16.4% year-over-year and operating income recovered from a loss in FY3/13 to a profit of JPY798 million in FY3/14. The recovery in profitability is attributed to reductions in fixed costs arising from a business restructuring plan.
  • Sales and operating income are expected to rise by 11.7% and 125.5% year-over-year during fiscal year March 2015 on the back of strong demand for silicon used in ceramic crucibles and photovoltaic cells, and thermoelectric modules used in automobile seat automated heating applications.
  • The Bridge Report calls attention to Ferrotec’s efforts to leverage its strengths in vacuum and precision processing technologies to expand its sales in the realms of foods, water, energy, communications and medical related fields over the intermediate term.

Ferrotec Corporation manufactures and sells silicon single and multiple crystal manufacturing equipment and other products in the photovoltaic related products segment, semiconductor manufacturing equipment, flat panel display (FPD) manufacturing equipment parts, semiconductor materials, and various thermoelectric temperature controllers widely used in personal computers, cellular telephones, and devices using liquid crystal and plasma technologies.

Sales rose by 16.4% year-over-year to JPY44.7 billion on the back of 44.8%, 14.6% and 7.0% year-over-year increases in sales of the electronic device, Equipment related , photovoltaic related businesses to JPY6.6, JPY21.6, and JPY13.2 billion respectively. These higher sales allowed gross income to rise by 55.1%, and reductions in sales, general and administrative expenses of 5.3% on the back of successful business restructuring allowed operating income to improve from a loss of JPY3.6 billion in FY3/13 to a profit of JPY798 million in FY3/14.

Total assets at the term end rose by JPY8.3 billion from the end of the previous term to JPY74.7 billion. After adjusting for changes in foreign exchange rates, the assets and liabilities of overseas subsidiaries rose by large margins in yen terms. Consequently, equity ratio improved by 5.3% points from the end of the previous term to 50.2% at the end of the current term.

Ferrotec’s FY3/15 estimates call for sales to rise by 11.7% year-over-year to JPY50.0 billion on the back of increases in sales of the Equipment related , photovoltaic related, and electronic device businesses of 3.1%, 22.3% and 14.2% year-over-year to JPY22.3, JPY16.150, JPY7.550 billion respectively. Increases in capacity utilization rates arising from higher sales, and cost reductions are expected to allow operating margin to rise from 1.8% to 3.6% and operating income to rise by 125.5% year-over-year to JPY1.8 billion. Ordinary and net incomes are expected to decline due to the disappearance of foreign exchange translation gains and extraordinary profits. Capital investments are expected to fall by 21.6% to JPY3.0 billion, while depreciation is expected to increase by 6.7% to JPY4.2 billion.

The Bridge Report calls attention to Ferrotec’s ability to facilitate a structure designed to put it back on a growth path confirmed by the recovery in FY3/14 earnings, and the aggressive strategy to expand its sales channels in China and other parts of Asia and to cultivate new applications for its products expected to be adopted from FY3/15 onwards. Over the medium term, Ferrotec is expected to implement measures that leverage its strengths in vacuum and precision processing technologies to expand the industries to which it provides products to include the food, water, energy, communications and medical fields.

To view the full report, please go to the website at the URL listed below.
http://www.bridge-salon.jp/report_bridge/archives/eng/6890/20140807.html

About Bridge Report:
Bridge Report is produced by Investment Bridge Co., Ltd. and provides accurate and objective information about the earnings, business strategies, and other information of publicly traded Japanese companies. Investment Bridge was founded in August 2000 and is one of Japan’s leading independent IR support services companies. Investment Bridge specializes in providing various solutions to Japan’s publicly traded companies with the goal of expanding our clients’ shareholder base and liquidity through increased recognition and understanding of companies.

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