Latest industrial laser company financials reflect market turbulence

Aug. 15, 2019
Billion-Dollar Club companies IPG Photonics and Coherent reported their last-quarter results, while Han's Laser and TRUMPF offered a look at their last fiscal-year financials.
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Billion-Dollar Club companies IPG Photonics (Oxford, MA) and Coherent (Santa Clara, CA) reported their last-quarter results, and Han's Laser (Shenzhen, China) and TRUMPF (Ditzingen, Germany) offered a look at their last fiscal year financials. The reports were as expected at all four companies.

IPG Photonics' management had cautioned in its second-quarter guidance that the third quarter might be a repeatand it was with a 12% decrease in revenue, resulting in a 12% decrease in half-year revenue. Coherent did not fare much better, showing a 9.9% loss for the third quarter and 31.5% decrease over nine months.

All companies cited problems in the marketplace economy brought about by a potential pending U.S. tariff war with China, as well as slowing internal markets there. Other geopolitical unrest, such as negative economic news from Germany and the still-unsettled Brexit, didn't help. In their reports, many of the managers referred to rising competitive pressures, mainly in China.

TRUMPF presented an advance review of its 2018/2019 fiscal year, matching the prior fiscal year with a 6% increase in revenues, driven by a high level of orders from the previous year and expansion of the extreme ultraviolet (EUV) business. On the downside, management bluntly stated that "the economic situation has deteriorated." And even Han's Laser commented on competitive pricing and trade concerns.

After digesting this news, I looked for sunshine in the reports and it is there in abundance. IPG Photonics had good news about significant revenue gains from new products and, as has been the case for years, they have a bunch of them50 in 2019. And the Genesis System purchase started paying off with its contribution from a 193% increase in system orders. A very bright point was receipt of a large order for its innovative Seam Stepper by a major European automotive OEM. The company's CFO noted, "it demonstrates a change in technology (laser vs. resistance welding) is being invested in, even when the market is relatively low."

Coherent management had been priming investors that giant OLED orders with deliveries into early 2019 would be the peak of the revenue curve, resulting in a decrease in overall revenues for the next year, which it did. And in spite of this advance notice, the hefty double-digit decline in the first nine months of the current fiscal year sent tremors though the laser community. However, good news in the form of new orders for Phase 2 of the OLED buildout bodes well for the coming months. Like its main competitors, Coherent has new products for new markets in the pipeline, such as the Adjustable Ring Mode laser that has shown success in battery welding, a developing large market that is the target for many laser system builders.

Industrial Laser Solutions has been tracking the industrial laser market for 33 years, following a select group of companies that are industry leaders. This list changes over time and for past 15 years, it is composed of public companies and a few large private companies reporting their financials publicly. Our latest survey shows that more than half of these companies, including the above, reported a loss in their last quarter, which has not occurred for eight years. All of those reporting cited the current tariff squabble with China and rising competition in and from Chinese companies. The largest of these, Han's Laser, is a company on our list.

Over the past months, I have been cautious in commenting on the manufacturing sectors using and considering laser technologyspecifically the global automotive industry, a significant market for laser technology. Globally, sales of SUVs and even light pickup trucks have slowed. This comes at a time when laser welding seems on the verge of serious expansion, thanks to technology such as adjustable beam mode processing that may crack the higher investment cost of laser vs. resistance welding. You can read more about this in a feature article in the upcoming September/October issue of ILS.  

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