Fingerprint Cards Ab (STO: FING B) decided to release its second quarter report in advance. Investors cannot be happy about the extremely disappointing numbers. Despite hyping some orders and potential for massive volumes to come together with some cooperation deals, the firm now admits that current sales are very low (almost zilch) and are expected to remain low for the second half of the year as well.
The main culprit is that area sensor sales for China dropped off a cliff while other projects were delayed or temporarily halted altogether. The company now thinks that distributors have a 7-9 months surplus inventory of area sensors but expects a rebound in the sector in China next year. The sales and profit numbers are reportedly confusingly enough with old and new method, what might look like a masking effort to some but comes from a change in cost of goods sold reporting initiated from the beginning of the year. This resulted in a gross margin of -550% for the second quarter.
Sales totalled 0.6 million SEK vs. 16.9 million last year and a gross loss of 3.1 million SEK was reported. Order backlog highlighting some of those major projects currently on halt was 46.3 million at the end of the quarter while cash and cash equivalents stood at 36.1 million SEK. Second quarter loss after financial items amounted to 9.8 million. Perhaps the only solace is the fact that the company chose to release the numbers in a manner that lessens the chance of some investors being better informed than others. The company says that in absence of major sales, FPC is able to operate for “at least another three quarters” before requiring new financing. Then again if major sales do happen, financing is needed for higher manufacturing costs. The share bled 38% of its value during the day.
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