AZ Electronic Materials shocks investors with gloomy outlook

LECT

LECTRONIC Materials yesterday warned that demand for its chemicals is likely to be more sluggish than expected, sending its shares down as much as 10 per cent.

AZ, which supplies the chemicals used in Apple’s iPad, revealed that revenues were one per cent lower at $363.7m (£232.5m) in the first half of the year, with pre-tax profits down 11 per cent at $51.9m.

The company also declared a core earnings margin of 30.4 per cent having previously warned in April that the metric would dip lower than 30 per cent. While the firm said it expects to meet full-year earnings expectations, it pointed out that caution from its customers is likely to keep a lid on sales for the rest of the year.

“While the industry backdrop is likely to remain unpredictable in the near-term, the long term demand drivers for our business remain strong and our customers continue to invest heavily in leading edge innovation to support new consumer technologies,” said boss Geoff Wild.

Shares in the firm, which have fallen 15 per cent in the last year, closed down 4.4 per cent at 303.5p.

Canaccord Genuity said the “underlying dynamics of the business units are broadly in line with the indications given [in] April”.