Brookfield manufacturer has record 2019 after China expansion
As it ramps up two new factories in China, Photronics again produced record revenue for both its fiscal year ending in October and the final quarter.
The company’s stock spiked more than 20 percent Wednesday as it sets its sights on further growth in 2020.
Photronics makes photomask plates that when light is shined through produce circuitry patterns on semiconductors and flatpanel displays.
The Brookfieldbased company marked its 50th year in business in 2019.
Photronics earned $40.5 million in fiscal 2019 as revenue increased 3 percent to $551 million, including $156 million in its fourth fiscal quarter when profits totaled $13 million.
Fullyear profits ebbed by half as Photronics brought two new factories online in China to ship photomasks to customers there who make flatpanel TVs and other digital devices. Investors are seeing the bigger picture, however, bidding up Photronics stock to $15.27 on Wednesday afternoon for a 21 percent gain.
Photronics assigns some of its earnings to noncontrolling entities, with shareholder profits totaling $9.7 million for the fourth quarter and $29.8 million for the year.
On a Wednesday conference call, CEO Peter Kirlin called the company’s 2019 performance “a remarkable achievement” given the China expansion and “growing geopolitical uncertainty” in his words.
The Trump administration remains at loggerheads with China on the issue of tariffs, with additional levies scheduled to take effect on Sunday unless the sides reach a trade agreement or otherwise table the planned tariffs.
Kirlin said the tariff war has hurt Photronics on one front with an offsetting benefit on another, making buyers there cautious but prompting some manufacturers to produce their own chips and panels, with Photronics able to supply them from inside China’s borders via its new factories.
“Uncertainty created by actions taken by the U.S. administration have begun to have a negative impact on some of our Chinese customer demand — however the impact was concentrated and relatively small,” Kirlin said. “In the fourth quarter, the impact flipped to become positive and more pervasive. As trade discussions have gone unresolved and certain highprofile companies in China have been placed on restricted trade lists, the resulting uncertainty has motivated Chinese companies ... to become more independent and selfsufficient.”
Kirlin added that Photronics sold out its full production capacity at facilities in Taiwan and South Korea as it worked to keep up with demand, and that with the new factories in mainland China “we are right where we want to be,” in his words.