AZ ELECTRONIC Materials, a maker of chemicals for iPad displays and memory chips, yesterday saw a third of its market value wiped off after it said that profits would be lower than expected in the first half of the year.
The company said that its margins for the first six months of the year would dip below normal levels, although it also forecast an improvement in the second half.
AZ has previously worked with margins of around 33 per cent but it said yesterday it expects this to be under 30 per cent in the first half.
The news sent shares in the company crashing by 33.5 per cent yesterday, wiping £470m off the company’s market capitalisation.
This was the lowest level since the beginning of 2012.
A weaker than expected performance in the part of its business which provides materials used in integrated circuits was to blame, AZ, a FTSE 250 constituent, said. The company said yesterday that group revenue in the first quarter of 2013 had declined by around two per cent to $179.9m (£117.5m).
“Softness in demand patterns within the integrated circuit industry was compounded by increased pressure from dual sourcing by certain customers,” the company said in a statement yesterday.
Analysts at Singer called the update “disappointing” and said that the lower than normal margin implied a possible 2013 earnings downgrade of over 10 per cent.