AZ Electronic Materials tanks on gloomy guidance

AZ Electronic Materials saw shares plummet on Tuesday morning after the chemicals company reported a decrease in first-quarter revenues and warned of a flat year overall.

AZ Electronic Materials saw shares plummet on Tuesday morning after the chemicals company reported a decrease in first-quarter revenues and warned of a flat year overall.

Group revenue fell 2.0% year-on-year to $19.9m for the three months to April 8th, following lower-than-expected sales in its IC Materials division.

The company blamed weak performance and an unfavourable product mix in IC Materials, which includes products for use in integrated circuits and devices. Revenue in the division fell 7.0% year-on-year to $123.3m.

"This resulted in the group's EBITDA [earnings before interest, tax, depreciation and amortisation] margin in Q1 being lower than normal," the firm said in a statement.

Based on trading so far in the second quarter, the IC Materials business is expected to continue to perform below expectations for the first half of the year. The group's EBITDA margin for the first half is therefore pegged at less than 30%.

The stock was down 27.1% at 269p by 09:29 on Tuesday.

However, the Optronics business continued to perform well during the period, mainly due to new customer wins in the second half of last year. The division sells products for flat panel displays including televisions and computer monitors,

Optronics revenue in the first quarter increased by 9.0% year-on-year to $56.5m and the business is anticipated to continue to perform well during the year.

AZ Electronic Materials reduced its net debt to $298.7m in the first quarter from $289.4m at December 31st 2012.

"Ongoing discussions with our customers, together with an anticipated strengthening in underlying markets, mean that we remain confident of a stronger environment for growth during the second half of the year, and beyond," the company said.

"The group's revenue growth and EBITDA margin is expected to improve as the year progresses and remain weighted to the second half as per our previous guidance.

"We now expect that group revenue for the full year will be around the same levels as last year, but group EBITDA margin for the year will remain below normal levels."

RD

Recommended

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework
Investment strategy

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework

John Stepek talks to Steve Clapham, investor, analyst and author of The Smart Money Method, about the dangers in picking individual stocks and why you…
8 Apr 2021
BP looks set to return more money to shareholders as it beats expectations
Energy stocks

BP looks set to return more money to shareholders as it beats expectations

Oil major BP is to embark on a share buyback programme after significantly reducing its debts. Saloni Sardana looks at what it means for your portfoli…
6 Apr 2021
Deliveroo has hit the market – but it’s not getting the warmest welcome
UK stockmarkets

Deliveroo has hit the market – but it’s not getting the warmest welcome

Food delivery company Deliveroo made its debut on the stockmarket this morning. But with the share price sliding by 30% straight away, it’s not made t…
31 Mar 2021
Three stocks to buy now that will come back stronger after Covid-19
Share tips

Three stocks to buy now that will come back stronger after Covid-19

Professional investor Ed Wielechowski of Odyssean Capital, chooses three compelling stocks that should thrive in a post-pandemic world.
29 Mar 2021

Most Popular

The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
Four investment trusts for income investors to buy now
Investment trusts

Four investment trusts for income investors to buy now

Some high-yielding listed lending funds have come through the crisis with flying colours. David Stevenson picks four of the best.
12 Apr 2021
Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021