ADVA sales up but net profits down

Created October 28, 2019
News and Business

ADVA has posted quarterly revenues of €144.3 million for the third quarter ended 30 September 2019, a rise of 14.4% over the same quarter a year ago. There was a pro forma operating income of €7.4 million (5.1% of revenues). This compares to the pro forma operating income of €6.8 million (5.4% of revenues) in the same year-ago period.

Operating income for Q3 2019 of €3.2 million decreased compared to €5 million in the same year-ago quarter. “This is mainly due to tariffs on China-made products in the US market and the strength of the US dollar,” said Munich, Germany-headquartered ADVA. Net income for the three months decreased significantly to €2.2 million from the €3.9 million generated in Q3 2018. For Q4 2019, the company is predicting revenues of between €142 million and €152 million, and pro forma operating income of 5% -7%.

At quarter-end, the company’s cash and cash equivalents totalled €38.4 million, representing a decrease of 20.5% compared to €48.3 million at the end of Q2 2019. The company said it “built up inventories and thus working capital” in the past quarter to “reduce the negative impact of import duties,” which led to the reduction in cash. The company’s net debt increased by €6.8 million to €74.9 million from the €68.1 million at the end of Q2 2019.

“In the third quarter our revenues continued to develop very positively, and we are satisfied with the overall order entry,” said Uli Dopfer, CFO of ADVA (pictured). “Somewhat challenging, on the other hand, are the negative effects of US trade policy on our business. As such, we’ve taken several measures to counteract the impact of this trade conflict. These include the relocation of production from China, proactive material purchasing and rapid transfer of pre-engineered subsystems, as well as tightening the control of operational costs. These measures are partly associated with one-time costs but will sustainably support us in terms of the positive development of our profitability,” he added.

The company will publish its financial results for Q4 and the full fiscal year for 2019 on 20 February 2020.

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This article was written
by Antony Savvas

Antony Savvas is a global technology journalist covering the key trends in the communications industry, and was there at the beginning of mobile business and ICT convergence, the move to the cloud and now digital transformation