PCB | June 07, 2007
Weak US Dollar lower Eltek's net income
Israeli manufacturer of flex-rigid circuitry solutions, Eltek Ltd., reported revenues for the three months ended March 31, 2007 of $10.2 million compared with $9.3 million for the first quarter of 2006. The increase in revenues is attributed to the receipt of new orders from existing customers.
Net income for the first quarter totalled $565,000 compared with net income of $641,000 for the same quarter in 2006. The decrease in net income from the comparable period is mainly attributable to the devaluation of the U.S. dollar against the NIS. The first quarter of 2007 was the Company's 10th consecutive quarter of profitability. Arieh Reichart, President and Chief Executive Officer of Eltek, commented: “During Q1 we continued to deliver revenue growth and profitability against the extreme weakness of the U.S. dollar, which had adverse impact on our financial metrics. This achievement reflects the strength of our underlying business model. I am particularly pleased with recent competitive wins, such as contracts with a major Fortune 100 U.S. manufacturer and a foreign defense conglomerate, as we have successfully expanded early stage business relationships to long - term serial production engagements. We continue to pursue sizable - long term - higher margin opportunities with both existing and new customers, and I am very optimistic that we will be able to announce additional new projects during 2007." Amnon Shemer, CFO of Eltek, commented: “This quarter's results have been prepared in accordance with US GAAP, and the financial statements have been presented in U.S. dollars since we believe that this way we can deliver more meaningful and relevant financial information to our shareholders." Mr. Shemer added: “As the majority of our revenue is U.S. dollar denominated, while a significant portion of our expenses, primarily employee salaries, is denominated in NIS, the accelerated devaluation of the U.S. dollar against the NIS has inevitably influenced our financial performance. The average exchange rate between the NIS and the U.S. dollar in the first quarter of 2007 was 9.7% lower than that of the first quarter of 2006. Nevertheless, we are very pleased to have experienced year over year revenue growth for high-end serial production capacity. Expansion of our Petach-Tikva facility by approximately 15,000 square feet is on track, and we believe that capacity increases from our recent investment in people, equipment and facilities will enable Eltek to support future growth."