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IQE Expects To Return To Profitability In H1 With Higher Revenues; Stock Climbs

Shares of IQE plc (IQE.L) were climbing around 27 percent in the morning trading in London after the supplier of advanced wafer products and material solutions to the semiconductor industry said it expects to return to profitability in the first half with higher revenues.

In its trading update for the half year ending June 30, the company noted that first-quarter revenues were slightly ahead of internal expectations. Further, trading in the second quarter to date has been strong in both the Wireless and Photonics Business Units.

IQE's production has not been affected to date despite the significant risk of disruption posed by the Coronavirus pandemic. All of its global sites have continued to operate with appropriate measures and controls in place.

For the first half, IQE expects total revenues to be at least 85 million pounds, an increase of over 27 percent from the last year. IQE also expects a low single digit adjusted operating profit.

The company said it expects to be cash generative in the first half.

Looking ahead, the company anticipates the possibility of some level of inventory adjustment in the second half as smartphone handset market is expected to decline year-on-year in 2020 due to the economic impact of the pandemic.

However, IQE has opportunities in both 3D Sensing and Wireless Power Amplifiers for 5G handsets, where the amount of compound semiconductor content per handset is increasing.

Demand for IQE's products for the US Military market is expected to continue to grow.

The company said it is unable to provide guidance for the full year. It is possible that current levels of demand will continue but equally possible that revenues could fall in the second half.

In London, IQE Plc shares were trading at 50.29 pence, up 27.39 percent.

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