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SMT & Inspection | November 04, 2008

IPTE will restructure both the automation & manufacturing business

IPTE, reports sales of €50.7 million for 3Q of 2008 compared with €58.1 million in the same period last year. The profit from operations in 3Q of 2008 was €193,000 compared with €3,290,000 in the same quarter last year. The company will restructure both - the automation business and manufacturing activities.
The net profit was €203,000 for the period versus €2,642,000 last year. The order book at the end of the 3Q of 2008 fell to €88.8 million versus €93.2 million at the end of the second quarter. The sales of the automation division for the quarter fell from €16 million in 2007 to €15.2 million (including Platzgummer sales representing €3.1 million). The order book slipped from €30.5 million at the end of the 2Q of 2008 to €28 million at the end of the third quarter.

The ‘Contract Manufacturing’ division’s sales decreased from €42.2 million in 2007 to €35.7 million in 2008. The order book for the division fell to €60.8 million compared with €62.6 million at the end of the second quarter of 2008. The financial results for the third quarter were positively influenced by €796,000 through the cancellation of all existing dollar contracts.

Reorganisation of the automation business
The results of the automation business in 2008 are disappointing. This is due to insufficient incoming orders, inadequate structural cost cover for a number of products and the poor profitability of a number of projects. When we take account of the global economic and financial crisis we believe that the current automation organisation demands important adjustment so it can be competitive.

It was therefore decided to reorganise the automation business. This reorganisation aims to reduce the cost structure in the automation activity by more than 10%. A number of activities will be merged to retain and reinforce the core competencies. We are keeping our customer strategy of a local presence with service and support in the 3 continents (Europe/America/Asia) and the most important European sub-markets. A full plan will be worked out with our staff in the coming weeks.

Reorganisation of the contract manufacturing activity
The contract manufacturing division announced the shutdown of the factory in Slovakia at the start of October 2008. This closure is the result of centralising the back-offices in Eastern Europe. In May 2008, the group opened a new factory in Oradea, Romania, with a total capacity of 16,000m² (including 8,000 m² for PCB assembly and 8,000 m² for cable assembly).

“Maintaining two similar back-office cable factories led to inefficient production, increasing operating costs (stock management) and double management. Moreover, the option to expand the Slovakian factory was limited in view of its location and structure. By moving the Connect Systems Slovakia cable business to Romania, efficiency will be improved and communication and logistics will be simplified so we can achieve our low cost structure. The cost of this shutdown is estimated at EUR 500,000 and will be posted in the fourth quarter of 2008; it will produce an annual cost saving of EUR 850,000 from 2009.

The most important events during the third quarter:
The TAF3 company based in Estonia was taken over at the end of July 2008. TAF3 specialises in automation and test and employs 30 highly trained mechanical, electrical and software engineers for this purpose. These have more than 10 years of experience on average in the telecoms and automotive sectors. IPTE paid goodwill of EUR 964,000 for this takeover.

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