Business Dynex says new product development will impact Q4

Business Dynex says new product development will impact Q4

2014/01/23

Dynex Power has made a statement relating to current difficulties in new product development and the power semiconductor device manufacturer has provided guidance on the adverse impact it will have on financial performance in the fourth quarter of 2013.

During the fourth quarter of 2013, Dynex ”tightened the selection specifications on the die” being supplied to its parent company, Zhuzhou CSR Times Electric Co. for use in China’s railway market.

“This caused yields to fall below the standard rate expected and in the short-term has increased cost,” said the company.

As a result the Dynex said it will record in its fourth quarter results a stock write off and stock provision totalling $1.4 million .

The company has agreed to credit CSR Times Electric approximately $170,000 for die that had previously been delivered to them.

“Management believes that these actions demonstrate its commitment to its customers and will benefit the business in the longer term,” said Dynex, in a statement.

Previously, Dynex reported that it expected revenue in the fourth quarter to be significantly higher than the $9.5m reported in Q3, with a return to profitability.

The company now expects to report revenue of $12.9m in the fourth quarter and the write-off and provision will impact the quarterly profit.

“The development of new and improved die is always a complex and trying exercise and hiccups along the way are part and parcel of that process,” said Dr. Paul Taylor, Dynex president and CEO.

“We have been here before. And whilst there is no simple solution in cases like this, we are familiar with the processes necessary to rectify the problems affecting the yield of these new products,” said Taylor.

Despite this difficulty, Taylor said the firm is still producing “product that meets the required specification and expect to see a full recovery over the next 90 days.”

According to Li Donglin, the chairman of Dynex, CSR Times Electric is “disappointed with the financial results of Dynex in 2013″.

“We are working very hard in conjunction with the staff at Dynex to address the manufacturing issue as quickly as possible and we are confident that the business will soon be reporting strong growth and a return to profitability,” said Donglin.

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