EPCOS AG announced its financial results for the third quarter 2006. Business development remained positive in all regions and in nearly all industries served in the third quarter of fiscal 2006 (April 1 – June 30, 2006). As a whole, new orders and sales again increased both sequentially and year on year. For the third consecutive quarter, the book-to-bill ratio was above one at 1.08 in the period under review.
New orders rose by 2% to € 356 million in Q3 2006, driven mainly by strong growth of more than 30% in business with products for automotive electronics applications. Substantial orders for the piezo actuators used in diesel injection systems played a key part in this growth. Customers generally also placed longer-term orders. Demand from the telecommunications industry increased by 5%.
These gains more than offset both the seasonal decline in orders from consumer electronics customers and the slight dip in orders from industrial electronics customers after a relatively strong previous quarter. They also compensated for decreased demand from distributors, which fell back to the level of Q1 after rising sharply in Q2. The decline in Q3 came because distributors have now filled their stocks with RoHS-compatible components. This development was driven by the EU Directive on the Restriction of Hazardous Substances (RoHS), which took effect on July 1, 2006. The directive prohibits the use of certain substances (such as lead, mercury and cadmium) in mobile phones and consumer electronics devices, for example. In some cases, this required technical changes to components – to adapt them to lead-free soldering processes, for instance.
Business in almost all regions and with almost all industries served contributed to the 2% sequential increase in sales to € 330 million. The only exceptions were the consumer electronics industry and the NAFTA region. In the latter region, sales dropped primarily because of an unfavorable development of the dollar/euro exchange rate. Sequentially, Capacitors and Inductors and the Ceramic Components segments both posted higher sales. The Surface Acoustic Wave (SAW) Components segment ended Q3 slightly ahead of the positive figure for the previous quarter, despite a seasonal drop in business with filters for multimedia applications.
Strong double-digit order growth also came from every region. The increase was largest in the NAFTA region and in Asia, both of which saw new orders surge by more than 30%. Year on year, sales rose by 15% in Q3 2006. While business with manufacturers of consumer electronics equipment posted only single-digit growth, EPCOS achieved double-digit growth in sales of its products to all other industries served.
A further substantial improvement in earnings was recorded in Q3 2006, largely on account of the higher sales volume. In Q3 2006, earnings before interest and tax (EBIT) thus rose to plus EUR 15 million. Net income in the period under review was plus € 14 million. Earnings per share were plus 21 eurocents. Total net income in the quarter under review was € 10 million. For the last time, this figure also includes a loss of € 4 million for the tantalum capacitor business, which was transferred to KEMET effective April 13, 2006. Net cash flow was plus € 98 million in Q3 2006. This figure contains a cash inflow of EUR 68 million from the sale of the tantalum capacitor business. Net cash flow for the first nine months of fiscal 2006 thus totals plus € 85 million – a very significant improvement on the figure of minus EUR 105 million posted a year ago.
