The Ayala Group’s manufacturing arm Integrated Micro-Electronics Inc. (IMI) reported a net loss of $1.6 million in the first nine months of 2023 from $0.81 million in the same period last year.

In a disclosure to the Philippine Stock Exchange (PSE), the firm said revenues were lower and the bottomline includes losses from STI Limited as IMI worked on closing the divestment transaction with Rcapital.

IMI generated $341 million in revenues for the third quarter of 2023, three percent lower year-on-year. The drop in demand is largely driven by a general slowdown across the electronics industry with companies tightening working capital levels amidst excess inventory in the supply chain.

The company’s gross margin sits at 8.5 percent, with a total gross profit of $28.8 million for the quarter.

IMI’s wholly-owned subsidiaries ended the quarter with a net income of $1.9 million versus $3.8 million in the same period last year.

Major contributors to this drop are a $1 million inventory provision in the third quarter and a $0.9 million increase in interest expense compared to 2022.

Management teams will continue to closely monitor inventory levels to mitigate our exposure and accelerate cash conversion.

With STI Limited still in the process of transitioning out of the group, non-wholly-owned subsidiaries reported a net loss of $3.5 million in the third quarter.

“With the recent closing of the sale of STI Limited to Rcapital at the end of October, our management teams will be able to refocus efforts into improving margins for the core businesses and concentrate on sharpening our customer portfolio,” said IMI President Jerome S. Tan.

He added that, “starting November 1, 2023, the financial results of STI Limited will no longer be consolidated into IMI figures, and the capital dedicated to supporting STI Limited will be redistributed to enable growth in our profitable business segments.”

“New mobility project wins from the past few years have begun to contribute to the company, with the segment growing 12 percent compared to 2022. Sales pipeline activity remains robust with $247 million worth of annual revenue potential across all segments secured in the first nine months of 2023, a 50 percent improvement against the same period last year of $165 million," he said.

“We are excited to bring in new projects from both existing and new customers which we believe will allow us to further increase profitability in our business. However, we remain prudent as industry-wide uncertainties continue to affect customer forecasts and high levels of inventory in the electronics market have led to increased financing expenses,” Tan noted.