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AVX's sales fall as electronic markets slow

27 Jan 2016 14:56 GMT
AVX's sales fall as electronic markets slow

London, 27 January (Argus) — US electronic capacitors manufacturer AVX's sales declined in the third quarter of its 2015-16 financial year, ending 31 March 2016, to $287mn from $321.7mn a year earlier.

Sales in the first nine months of the financial year, covering the April-December period, were down by 14pc to $892mn from around $1.04bn a year earlier.

AVX, which manufactures high capacitance tantalum and ceramic components, attributed lower sales to weaker global economic conditions and the strong US dollar, which has hindered exports. Prices for the company's commodity products dropped by 1-2pc during the quarter, AVX chief executive John Sarvis said. AVX expects this trend to continue until demand improves.

AVX saw some improvement in orders for its components and interconnect devices during the October-December quarter, but customers are still cautious when ordering components for inventory, Sarvis said.

"We continue to be optimistic that the continuing evolution of new electronic devices will provide growth opportunities. But the timing for significant component and interconnect demand growth and increased consumer confidence remains uncertain," he added.

Global demand for tantalum capacitors in consumer electronics has fallen, owing partly to higher costs but also to the conflict minerals label attached to the metal, the production of which has switched in bulk from large-scale mechanised mines in Australia to mainly small-scale mining in the Democratic Republic of Congo and neighbouring Rwanda.

The consumer electronic market for capacitors has also suffered because of the shift from PCs and laptops to smaller devices — tablets, smartphones and more recently wearable devices that require fewer capacitors and increasingly tend to be tantalum-free. The market for PCs and tablets shrank by 7pc in terms of units in 2015, according to Sarvis, and is expected to continue falling in 2016. Smartphones have gained market share from tablets, and AVX expects them eventually to reach 80pc share of the mobile phone market.

But tantalum capacitors are still the components of choice in critical applications including medical devices and implants, and aerospace and automotive electronics — all expanding sectors. AVX's latest T4C Series HRC4000 solid tantalum microchip capacitor released this month is targeted at the growing medical market for implants and life-support applications, and more products are in development to meet the needs of new medical therapies.

AVX is also seeing growth in new applications for high-end electronics from the automotive industry, which is its largest consuming sector. This includes in particular electronics for hybrid and electric vehicles that are expected to benefit from the Chinese government incentivising low emission cars and public transport. Asia-Pacific accounts for 42pc of AVX's sales, against 29pc each for Europe and North America.

The defence sector provided underlying growth, as did the civil aviation sector as production of new generation aircraft ramps up. AVX has seen increased order activity in the past quarter in the military and aerospace markets, Sarvis said.

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