AVX Corp. reported a net loss of $77.0 million, or 44 cents per share on sales of $267.3 million in its second 2004 fiscal quarter ended September 30, compared to a net loss of $1.0 million, or 1 cent per share on sales of $295.4 million in the same quarter a year ago.
Results include pretax charges for restructuring expenses of $1.7 million related to headcount reductions and cost adjustments for a previous facility closure, and $87.7 million related to a writedown of the value of current tantalum inventory and future tantalum purchase commitments.
"Sales increased 4% compared to the previous quarter and incoming orders were encouraging," said John Gilbertson, president and chief executive of the Myrtle Beach, S.C., passives supplier. During a conference call with analysts, he added that unit volumes rose 17% sequentially and the book-to-bill ratio remained positive throughout the quarter.
On the negative side, Gilbertson said prices remained under pressure, falling 6 to 8% as the unit sales mix remained heavily weighted toward small case size capacitors. This contributed to gross margins remaining depressed at below 1%, he said.
Gilbertson expects price pressure to continue for at least another quarter, but added prices are showing signs of stabilizing, particularly on tantalum capacitors where he said AVX has fewer Asian competitors than in commodity ceramic capacitors. In addition, Gilbertson told analysts leadtimes for parts such as large case size ceramic capacitors were starting to stretch, with production capacity utilization for those parts approaching 90%.
For the third 2004 fiscal quarter ending December, Gilbertson expects revenue to rise 5 to 6% sequentially.