Ayala-led IMI turns profitable despite components shortage

Keren Concepcion G. Valmonte

INTEGRATED Micro-Electronics, Inc. (IMI) turned in a first-quarter net income of $2.19 million attributable to its equity holders, swinging from the P4.62-million loss a year ago, despite the shortage in the electronics component market.

“As we continue to adapt to the market environment imposed by the pandemic, our entire industry is once again challenged by component shortages that have been impacting electronics companies worldwide,” IMI President and Chief Executive Officer Arthur R. Tan said in a statement on Thursday.

The Ayala-led company, an exporter of products for the electronics sector, said its management took “swift decisive actions” to mitigate the impact of the global shortage.

Sales grew by 28% to $327.54 billion from the $255.82 billion seen in the January-to-March period last year, which was affected by the first stages of the pandemic.

“IMI management teams have taken swift decisive actions to leverage our scale and global supply chain network to mitigate the impact of this headwind. I am confident that we will again emerge stronger and wiser from the challenges that 2021 brings,” Mr. Tan said.

IMI said its wholly owned subsidiaries grew by 22% to $255 million, stating that results “could have been better if not for longer supply lead times on certain critical components.”

The company said that most of its global businesses fared better compared with their performance in the fourth quarter of last year, except for its unit in Mexico along with VIA Optronics AG and STI Ltd. because of the component shortage.

The Mexico business generated $37.3 million in the first quarter of 2021, 13% higher than the $33.1 million seen in the same period the previous year. However, it is lower than the $41 million seen in the fourth quarter of 2020.

“They have five million of revenues that they were not able to book because of missing components,” IMI Senior Managing Director and Global Chief Financial Officer Jerome S. Tan said during the company’s first-quarter briefing.

“They have, however, started to normalize in [the second quarter] so we expect much higher growth,” he added.

Meanwhile, non-wholly owned business segments improved by 55% in revenues to $73 million.

VIA Optronics is expected to invest more in research and development, while STI will be focusing on new business through the mass production phase for the rest of the year to drive further growth.

IMI posted a 48.5% increase in gross profit to $28.91 billion from $19.47 year on year.

Gross profit margin bumped up to 8.8% from last year’s 7.6%. This is slower than the 10.3% seen in the previous quarter due to lower revenues, more expensive shipping fees, and the component shortage.

“The impact on the component shortage this time around is less on the increase in the raw material prices, but more on the inefficiency as a result of the different lead times, the allocation, or misdeliveries from the suppliers. So that created a lot of inefficiency in terms of production,” said IMI’s finance chief Mr. Tan.

On Thursday, IMI shares at the stock exchange closed at P10.30 each, going up by 0.39% or four centavos.