ADVA details COVID-19 coronavirus effects on 1Q20 financial performance
With network operators having detailed how the COVID-19 coronavirus pandemic has effected network bandwidth demands, it’s now time to start hearing from optical communications technology vendors. A string of such companies, both at the systems and component/subsystems level, are slated to announce quarterly financial performance, including the months of February and March when the pandemic began to spread. Optical transport platform company ADVA (ISIN: DE0005103006) was among the first of these, announcing fiscal first quarter 2020 results April 23. And in a scenario that will likely be repeated by other companies as they release their results, the quarter showed a mix of positives and negatives – and enough uncertainty to make ADVA executive decide that forecasting future results is fruitless.
On the plus side, revenues of 132,686,000 euros showed a 3.5% year-on-year improvement. Sequentially, ADVA suffered a sequential revenue decline of 12.2%, but such a step downward between the fourth quarter of the previous year and the first quarter of the new year is typical in the communications technology space. Demand for the company’s products “developed positively” during the quarter, in the words of a company press release.
However, the pandemic negatively affected other financial facets. Company management estimates they lost out on about 10 million euros due to the coronavirus. Pro forma gross profit of 42,275,000 euros was down 6.3% from the year-ago quarter and 22.6% from 4Q19; gross profit in the quarter would have been higher by 4.1 million euros absent the effects of the pandemic, the company indicated in slide delivered along with the results. Operating income was -1,671,00 euros. “The decline in profitability is mainly due to the lockdown in Wuhan at the beginning of the first quarter and to significant project-related shifts in the product and customer mix in Q1 2020,” the company stated. ADVA also reported one-time expenses that included “selective head count reduction” and site closures. The company did not say how many employees lost their jobs.
“We have developed a very agile and flexible supply chain, and our development and distribution centers have so far largely avoided the crisis,” commented ADVA CEO Brian Protiva via the release. However, the company nevertheless noted that “increased risks in maintaining the ability to supply” remain, as does the potential for a recession-inspired downturn in product demand. The company therefore has withdrawn its previous guidance for the year, which included an increase in revenues to more than 580 million euros and growth in pro forma operating income of more than 5% of revenues. Management also declined to issue new guidance, even for the next quarter.
For related articles, visit the Business Topic Center.
For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer’s Guide.
To stay abreast of fiber network deployments, subscribe to Lightwave’s Service Providers and Enabling Technologies newsletters.
Stephen Hardy | Editorial Director and Associate Publisher, Lightwave
Stephen Hardy is editorial director and associate publisher of Lightwave and Broadband Technology Report, part of the Lighting & Technology Group at Endeavor Business Media. Stephen is responsible for establishing and executing editorial strategy across the both brands’ websites, email newsletters, events, and other information products. He has covered the fiber-optics space for more than 20 years, and communications and technology for more than 35 years. During his tenure, Lightwave has received awards from Folio: and the American Society of Business Press Editors (ASBPE) for editorial excellence. Prior to joining Lightwave in 1997, Stephen worked for Telecommunications magazine and the Journal of Electronic Defense.
Stephen has moderated panels at numerous events, including the Optica Executive Forum, ECOC, and SCTE Cable-Tec Expo. He also is program director for the Lightwave Innovation Reviews and the Diamond Technology Reviews.
He has written numerous articles in all aspects of optical communications and fiber-optic networks, including fiber to the home (FTTH), PON, optical components, DWDM, fiber cables, packet optical transport, optical transceivers, lasers, fiber optic testing, and more.
You can connect with Stephen on LinkedIn as well as Twitter.