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ProPhotonix warns of first-half loss after key customer switches technology

LED illumination system manufacturer ProPhotonix warned it would swing to a first-half loss after it lost sales from a key customer and its margins shrunk.

Revenue for the six months through June was expected to rise 4% to around $8.8m, which below company expectations.

Higher sales to several major customers were offset by a decrease in sales from one large customer that converted to an alternate technology in the second quarter of 2017.

Revenue was also impacted by delayed shipments valued at around $0.5m that would instead be recognized in the second half.

A competitive market environment, revenue mix and higher component costs contributed to gross profit margins declining to around 39%, down from 44% on-year.

ProPhotonix said it therefore expected to post an operating loss of around $0.5m, compared to a $0.6m profit on-year.

Ebitda was expected to fall to around $0.2m, compared to $0.7m on-year.

Turning to its outlook, the company said its order book at 30 June had grown to $7.3m, up from $6.0m on-year, but at a similar level to what it was at 31 December.

Revenue for the full year was expected at $19.0m, gross profit margin at around 41%, adjusted EBITDA at between $1.25m and $1.50m, and net income of break-even.

'We remain very optimistic about 2019 and beyond,' chief executive Tim Losik said.

'Whilst revenue recognized has been slower than expected in this first half of 2018, our opportunity pipeline for laser and LED OEM products and UV LED product sales is stronger than at any time.'

'Also, during the first half of 2018 we secured our sixth development project with a Fortune 50 original equipment manufacturer, and signed a large engineering design project, valued in excess of $0.4m, which will be delivered between Q4 2018 and Q2 2019, with production expected thereafter.'

'We continue to invest in production capacity and technical capability as we take on additional new customers and OEM products.'

'These investments will occur in advance of realized revenue to complete the production build out necessary for the UV LED products.'

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