AMS tops fourth-quarter revenue forecast, sees sales slowing even without coronavirus

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© Reuters. AMS tops fourth-quarter revenue forecast, sees sales slowing even without coronavirus© Reuters. AMS tops fourth-quarter revenue forecast, sees sales slowing even without coronavirus

VIENNA (Reuters) – Sensor specialist AMS reported fourth-quarter revenues above its own forecast amid strong demand for high-end smartphones but warned revenues in the first quarter would fall even without negative effects from the coronavirus.

Adjusted earnings before interest and tax (EBIT) were at $184.3 million and revenue reached $655 million in the three months through December, the Austrian group which is about to take over Germany’s Osram said on Tuesday. The adjusted EBIT margin was at 28%.

AMS, generating a large chunk of revenue with sensors for Apple’s iPhones, had guided for $610-$650 million in revenues in the fourth quarter and an EBIT margin of at least 28%.

Shares in AMS were up 5.13% in JB premarket trade.

Assuming no meaningful negative impact from the coronavirus outbreak, AMS expects revenue in the first quarter to ease to$480-520 million due to usual weak demand at the start of the year. The EBIT margin is seen to fall to 19-21%.

AMS has no production facilities in China, but supply chain disruptions in the country due to the new virus could hit its business. Analysts estimate that China’s smartphone sales may plunge by as much as 50% in the first quarter, as many retail shops have closed for an extended period.

Apple (NASDAQ:) said last week it was extending its retail store closures in China and has yet to finalize opening dates, as Foxconn, which assembles iPhones, struggles to fully resume work.

AMS’s fourth quarter operating cash flow was $273.5 million and net debt amounted to $1.75 billion per end-December, it said.

On the acquisition of Osram it said: “Encouraged by the constructive relationship with Osram and overwhelming positive feedback on the strategic merits of the transaction, AMS expects to successfully close the transaction as envisaged.”

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