Fibre laser manufacturer IPG Photonics has experienced a 19 per cent drop in sales to China, on a year-over-year basis, throughout its final quarter of 2018.
The decrease comes at a time of ongoing challenging economic conditions in China, with the firm expecting year-over-year declines in revenue to persist in the first and second quarters of 2019.
Total revenue for the quarter decreased by 9 per cent, year-over-year, to $330 million.
Materials processing sales, accounting for 94 per cent of the total revenue for the quarter, decreased by 9 per cent year-over-year due to lower sales in metal cutting and 3D printing, according to IPG. These were partially offset by higher sales in welding applications. Sales to other markets increased 5 per cent year-over-year, driven by growth in communications, government and medical applications.
‘While the global macroeconomic and geopolitical challenges affecting the sector and our business have persisted into 2019, we have seen some encouraging signs over the last two months,’ commented IPG CEO Dr Valentin Gapontsev. ‘There has been a modest pickup in order activity since late December, and we are more encouraged by the overall demand environment than we were three months ago.’
Sales of high-power continuous wave (CW) lasers, representing 56 per cent of the total quarterly revenue, decreased 20 per cent year-over-year. Also, on a year-over-year basis, medium-power CW laser sales decreased 29 per cent, quasi continuous wave (QCW) lasers sales decreased 12 per cent, pulsed lasers sales increased 33 per cent, and systems sales increased 42 per cent.
By region, in addition to the 19 per cent decline in China, sales to Europe decreased by 12 per cent on a year-over-year bases, while sales to North America increased 32 per cent and sales to Japan increased 4 per cent.
‘We expect pricing headwinds related to more aggressive competition in China to continue, exacerbating this challenging demand environment,’ said Gapontsev. ‘Although conversations with our OEM customers in China suggest cautious optimism regarding a mid-year pickup in demand driven by government stimulus and continued infrastructure investment, we do not have clear visibility into full year OEM order plans at this time.
‘In general, we would expect year-over-year declines in revenue to persist in the first and second quarter of 2019 due to more challenging comparisons, followed by improving trends in the back half of 2019 driven by potential market recovery and strength in new products and solutions.’
For the first quarter of 2019, IPG expects revenue to decrease further to between $290 million to $320 million.