VIGO estimates for Q3 2022 – YoY revenue increase despite challenging market conditions

VIGO estimates for Q3 2022 – YoY revenue increase despite challenging market conditions, steadily growing semiconductor demand and order book will support VIGO’s return to strong growth path

VIGO Photonics S.A. (WSE: VGO), a global manufacturer of the most advanced photonic mid-infrared detectors and detection modules and semiconductor materials achieved approximately PLN 16.9 million in revenue at the consolidated level in Q3 2022, a slight increase of approximately 2% compared to Q3 2021.

 

Sales of detectors and detector modules in Q3 2022 amounted to PLN 16.1 million (+0.4% YoY) and sales of semiconductor materials totalled PLN 0.8 million (+41% YoY).

 

The order backlog as at 30 September 2022 in YTD terms (year-to-date) amounted to PLN 63.1 million and was approximately 23% higher compared to the same period last year (YTD as at 30.09.2021), demonstrating the consistently high demand for VIGO Photonics products.

 

The highest sales increases against Q3 2021 were achieved by VIGO Photonics in applications: science and medicine (+105% YoY), industry (+41% YoY) and transport (+8%). A significant rise of 41% YoY was also recorded in the semiconductor materials segment. The YoY decrease in sales in the military segment is due to lower orders from the main customer in this segment compared to last year, which the company has previously communicated.

 

Consolidated data: sales revenue by application Q3 2022 vs. Q3 2021 [thousand PLN]

In the Q3 2022 revenue structure, the highest contributions came from the following applications: industrial 63%, science and medicine 13%, transportation 10% and military 8%, respectively. The share of the semiconductor materials segment in total sales was approximately 5%.

 

Despite the current difficult situation in global markets, we recorded a slight year-on-year increase in sales in Q3 2022, so we regard this period’s revenue as stable. In line with the strategy, we had hoped for even higher sales in industrial and transport applications. However, as we signalled on the occasion of the publication of the interim report for the first half of the year – due to the postponement of some orders to 2023, caused by problems with the availability of components for some of the products, the revenue dynamics of VIGO Photonics for Q3 was almost flat. We expect this trend to continue in Q4 this year. Demand for our products is, however, very strong – despite the unfavourable conditions, our sales in industrial, transport and science and medical applications are increasing year-on-year and, were it not for the difficulties with components, it could have been significantly higher in these applications. The high interest in our products is also evident in our order book. At the end of September this year, the value of orders acquired since the beginning of the year amounts to more than PLN 63 million and is 23% higher year-on-year, even despite the high base of 2021, when we had large orders in the military segment, says Adam Piotrowski, CEO of VIGO Photonics.

 

would like to emphasise that component supply bottlenecks only affect a part of the production of detection modules, and the production of detectors without electronics and materials for photonics is proceeding smoothly. Component shortages primarily affect production for transport and industrial applications. We estimate that currently, the impediments affect approximately 10-20% of our total production volume, explains Adam Piotrowski.

 

In addition, we have been gradually introducing new price lists for our products since the beginning of October, and the effects of these increases will be visible from the beginning of next year. It is worth highlighting that the current market situation does not affect the implementation of our pro-growth strategic initiatives – their implementation is and will continue as planned. We also maintain our long-term strategic assumptions, concludes Adam Piotrowski.

 

In total, VIGO Photonics’ consolidated revenues in Q3 2022 stood at PLN 47.7 million (-3.2% y/y). Sales of detectors and detection modules in this period reached PLN 45 million (-4% YoY), and semiconductor materials PLN 2.7 million (+16% YoY).

 

The slight year-on-year reduction in the level of total revenues in Q3 2022 is primarily due to lower revenues from the military application, and lower-than-expected revenues from the industrial and transportation applications as a result of lower availability of some components and disrupted supply chains. This period’s revenue is also impacted by Q1 2022 revenue levels owing to the launch of the cleanroom early this year.

 

NEW EPITAXIAL REACTOR

A new epitaxial reactor for the production of III-V semiconductor materials (chemical compounds from groups III and V of the periodic table of elements) was delivered to the company in September this year. Commissioning of the system is currently underway and the start of materials production in the new reactor is scheduled for early 2023. The start-up of the reactor will double production capacity, allow us to serve more customers and embark on more new projects with customers.

 

DEVELOPMENT STRATEGY – 2021-2023 PERSPECTIVE

In 2021, VIGO presented a new two-phase development strategy for 2021-2026, which singles out six development initiatives – technological areas aimed at strengthening the Company’s position as one of the most innovative and rapidly growing companies on the market. By 2023, the Company’s goal will be to continue the R&D projects it has started in the areas of photonic technology, integrated circuits, III-V material detectors, semiconductor material epitaxy and infrared source technology. The technological and technical base will be developed. Due to the current market situation, the Company is currently focusing on strategic initiatives that contribute most to revenue growth in the short term. The second phase of the strategy will run up to and including 2026 and will consist of the implementation of selected development initiatives.

 

 

 

Contact for media and individual investors:

Piotr Piotrowski, cc group

piotr.piotrowski@ccgroup.pl, +48 697 613 010

 

Contact for institutional investors:

Małgorzata Młynarska, cc group

malgorzata.mlynarska@ccgroup.pl, +48 697 613 709