No one can say at the moment how long this inventory clearout will last, said chief executive Gerhard Pegam, who took the reins at the company in April. Epcos said it now expected sales to rise between 10 percent and 15 percent in 2001, with an operating profit margin of about 16 percent, against a previous forecast of 20 percent sales growth and an operating margin of 17 percent. The outlook for the mobile handset sector has grown steadily worse since the beginning of the year as one leading manufacturer after another cut global sales forecasts. Earnings per share rose 16 percent to 0.96 euros. The figures for the second quarter are quite positive but they were overshadowed by the outlook, Sal Oppenheim analyst Juergen Wagner said.
Visibility is still low, and there is still no light at the end of the tunnel.
New orders fell 53 percent from the year-earlier period to 297 million euros, and were almost 60 percent below the 703 million in new orders from the first quarter, though Epcos said it still had an overall order backlog of over 900 million euros. For the whole of the first half, sales climbed 36 percent to 1.1 billion euros, while earnings before interest and tax rose 67 percent to 226 million euros, and earnings per share were up 65 percent to 2.33 euros. Pegam said the third quarter would see continuing weakness, with sales and earnings likely to be at or below last year's level. He said the company would tighten cost controls and seek further savings from its suppliers as well as cutting planned investment by 100 million euros to meet the slowdown. The Munich-based group said it had already cut several hundred jobs from both its German and international operations, and while it had no immediate plans for more cuts, it did not rule out further job losses if the situation failed to improve.