May 4, 2017 -
Fingerprint Cards (FPC) issued its financial results for Q1 2017, which fell well below expectations as an excess of inventories industry wide and increased competition impacted the company’s revenue, according to a report by Reuters.
The decline in earnings comes after FPC’s ditched plans last month for what would have been its first dividend.
FPC revealed in March that its Q1 2017 revenue would drop by more than 50 percent due to weakened demand from smartphone makers and the inventory build-up of sensors.
The company’s customers are mainly Chinese smartphone vendors such as Huawei and Oppo after making its big breakthrough in 2015 as demand for fingerprint sensors in smartphones and tablets soared.
FPC said that it expects inventories to normalize during the current Q2 and reiterated that it could not forecast earnings for 2017.
The company reported an operating profit of 70.8 million SEK (US$8 million) in Q1 2017, which is significantly lower than the 110 million SEK (US$12.4 million) expected by analysts in a Reuters poll, and sharply down from 589 million SEK (US$66.6 million) reported in Q1 2016.
“To safeguard our profitability, we are reviewing our costs and the business at large, to ensure that we invest our resources in the right areas,” Fingerprint Cards CEO and president Christian Fredrikson said in a statement.
Meanwhile, FPC’s revenue declined by 54 percent to 686 million SEK (US$77.6 million), which is lower than the 675 million SEK (US$76.3 million) forecasted by analysts in the Reuters poll.
“The share has been very weak and even though the underlying figures are OK relative to estimates they are still weak numbers and the remarks on increased competition and remaining high inventory levels in Q2 should hold it back,” the company said in a note to clients.
The company reported a gross margin of 41 percent, while its cash flow from operating activities was a negative SEK 324.1 million (US$36.6 million).
In a separate announcement, FPC said that it has named Pontus Jägemalm as chief technology officer (CTO) as part of the company’s strategy to strengthen its market position and improve its capabilities.
Jägemalm will continue to hold the position of senior vice president of research and development at FPC.
Leadership for the daily research and development work will be divided between the business lines (mobile, smartcard, PC and embedded) and existing managers within research and development.
In his new role as CTO, Jägemalm will further drive and accelerate development activities in close cooperation with FPC customers.
“I am of course grateful for the trust to take on the role as CTO, which for me as senior vice president for research & development means an increased focus on innovation, long-term development and alternative technologies,” said Jägemalm. “It is gratifying that the Board and the company supports a growing focus on new technology. With our highly skilled and ambitious staff, we will focus both on adapting our technical solutions for new application areas and on broadening the basic technology.”