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Coherent Q218 Revenues and Net Income Up 5% Y/Y, but Outlook Negative on Future OLED Revenue
August 13, 2018


Coherent’s Q218 net income of $87.3 million on sales of $482 million – both figures representing Y/Y increases of around 5 per cent. But the company, which has benefited from the rise in Gen 6 OLED fabs using LTPS and the flexible OLED trend has warned of a decline in total sales in its forthcoming financial year, key customers refine their manufacturing expansion plans. Samsung uses Coherent’s excimer lasers in the annealing step, but Samsung has recently deferred on its A4 and A5 fab equipment purchases. But while Coherent’s CEO John Ambroseo says there is no problem in terms of general demand for OLEDs, Samsung’s competitors are operating at low utilization and waiting until yields improve before they invest in laser production equipment heavily.
For Coherent, it means that the current lull in demand for its excimer laser systems will continue into next year. “For our actual and projected OLED revenue, fiscal 2018 is the current peak and fiscal 2019 will likely be down 15-20 per cent before a recovery starts in fiscal 2020,” Ambroseo told an analyst conference call discussing the firm’s latest financial quarter. As a result, Ambroseo says that company sales in its fiscal year 2019 (which begins October 1, 2018) should be “within five per cent” of the fiscal 2018 total, which according to current estimates should come in slightly above $1.9 billion. If and when those emerging OLED display manufacturers do work out their production processes, Coherent ought to be a major beneficiary. “Recent conversations with panel manufacturers about the investment outlook again confirmed that more than twenty OLED fabs are planned between now and 2023,” Ambroseo told analysts – adding that handset-sized displays will continue to dominate applications through 2021. 
Coherent sells a diverse range of laser equipment that it could make up for the anticipated fall in OLED-related sales with growing revenues from other applications – notably fiber lasers and related components for materials processing. “We have continued to make inroads into the materials processing market, which was one of the motivations behind the Rofin-Sinar acquisition,” the CEO said. “The two largest opportunities are in fiber lasers and components for cutting and welding and in laser-based tools for electronics, automotive and medical device manufacturing.”
Of the company’s anticipated $1.9 billion turnover in its current fiscal year, approximately $250 million relates directly to fiber lasers and associated components, Ambroseo added.
And he expects that figure to rise by more than 20 per cent next year, helping to offset much of the anticipated drag from flat-panel displays.
Key areas where Coherent sees good traction include the production of batteries for electric vehicles, where both sales and orders are said to be rising at double-digit rates. That is an area where the company claims to have a technological advantage over its rivals, thanks to a protective element in its laser heads preventing potentially damaging feedback from highly reflective metals like copper.
For the final quarter of the company’s fiscal year 2018, Ambroseo and CFO Kevin Palatnik are expecting to report sales somewhere between $465 million and $485 million. If that prediction proves accurate, total FY 2018 sales would be in the region of $1.92 billion - up from $1.72 billion in its FY 2017.