Difficulties in New Product Development Impacting Results
Listing: TSX Venture Exchange
LINCOLN, England, Jan. 22, 2014 /CNW/ - Dynex Power Inc., a leading, high power semiconductor company, today provided commentary on current difficulties in new product development and provided guidance on the adverse impact it will have on financial performance in the fourth quarter of 2013.
During the fourth quarter of 2013, Dynex further tightened the selection specifications on the die being supplied to its parent company, Zhuzhou CSR Times Electric Co., Ltd, for use in China's railway market. This caused yields to fall below the standard rate expected and in the short-term has increased cost. In recognition of this, the Company will record in its fourth quarter results a stock write off and stock provision totalling $1.4 million. In addition, the Company agreed to credit CSR Times Electric approximately $170,000 for die that had previously been delivered to them so as to avoid any potential problems materialising with customers. Management believes that these actions demonstrate its commitment to its customers and will benefit the business in the longer term.
In its 2013 third quarter Management's Analysis and Discussion, Dynex reported that it expected revenue in the fourth quarter to be significantly higher than the $9.5 million reported in quarter three, with a return to profitability. The Company now expects to report revenue of $12.9 million in the fourth quarter and would have been reporting a modest quarterly profit but for the write off and provision referred to above.
Dr. Paul Taylor, President and Chief Executive Officer commented, "The whole management team at Dynex is disappointed by the problems we are reporting today. The development of new and improved die is always a complex and trying exercise and hiccups along the way are part and parcel of that process. We have been here before. And whilst there is no simple solution in cases like this, we are familiar with the processes necessary to rectify the problems affecting the yield of these new products. We are working closely with and receiving strong support from CSR Times Electric on these challenges and will resolve these problems as soon as possible. Despite this difficulty, we are continuing to produce product that meets the required specification and expect to see a full recovery over the next 90 days."
Bob Lockwood, Chief Financial Officer commented, "The write off and provision hides what had otherwise been a strong quarter's revenue and a return to operating profit in the quarter. As a result of these charges, the Company expects to report a net loss in the fourth quarter of approximately $1 million."
Li Donglin, the Chairman of Dynex said, "Like all Dynex shareholders, we at CSR Times Electric are disappointed with the financial results of Dynex in 2013. We are working very hard in conjunction with the staff at Dynex to address the manufacturing issue as quickly as possible and we are confident that the business will soon be reporting strong growth and a return to profitability."
About the Company
Dynex designs and manufactures high power bipolar semiconductors, high power insulated gate bipolar transistor (IGBT) modules, high power electronic assemblies and radiation hard silicon-on-sapphire integrated circuits (SOS IC's). The company's power products are used worldwide in power electronic applications including electric power transmission and distribution, renewable and distributed energy, marine and rail traction motor drives, aerospace, electric vehicles, industrial automation and controls and power supplies. Our IC products are used in demanding applications in the aerospace industry. Dynex Semiconductor Ltd is its only operating business and is based in Lincoln, England in a facility housing the fully integrated silicon fabrication, assembly and test, sales, design and development operations. Dynex is majority owned by Zhuzhou CSR Times Electric Co., Ltd.
Zhuzhou CSR Times Electric Co., Ltd. is based in Hunan Province in the People's Republic of China. It is listed on the Hong Kong stock exchange. CSR Times Electric is mainly engaged in the research, development, manufacture and sales of locomotive train power converters, control systems and other train-borne electrical systems, as well as the development, manufacturing and sales of urban railway train electrical systems. In addition, CSR Times Electric is also engaged in the design, manufacturing and sales of electric components including power semiconductor devices for the railway industry, urban railway industry and non-railway purposes.
Press announcements and other information about Dynex Power Inc are available at www.dynexpower.com.
Information about Dynex Semiconductor Ltd and its products can be found at www.dynexsemi.com.
Further information on CSR Times Electric can be found at www.timeselectric.cn/en
All monetary values expressed in this release are in Canadian Dollars unless stated otherwise.
The TSX Venture Exchange has neither approved nor disapproved of the information in this press release.
SOURCE: DYNEX POWER INC.
For further information:
Dr. Paul Taylor
President and Chief Executive Officer
Finance Director and Chief Financial Officer
Dynex Power Inc.
Tel: +44 1522 500 500
Email: [email protected]