Eltek ’s North American sales surge by 17% but profitability declines

22 May, 2016

North American sales surged by 17%, while local sales in Israel declined by 6%. The global price pressure trend led to decrease in profitability

North American sales surged by 17%, while local sales in Israel declined by 6%. The global price pressure trend led to decrease in profitability  1

Israeli Printed Circuit Boards manufacturer Eltek reported revenues of $9.8 million in Q1 2016, compared to $9.7 million in the same period last year. But prices pressures led to a decrease in profitability and a net loss of $384K, compared to net loss of $234K in Q1 2015. The global PCB industry is facing price pressures:  Eltek noted it had to reduce prices in order to stay competitive. Price reductions have caused a growth in sales, but a decrease in profitability.

Local demand shrinks

Eltek’s Q1 2016 results strengthen the main trend seen in 2015: an ongoing shift from local sales to global ones. In the passing quarter, global sales increased by 8% compared to the same quarter last year, while local sales in Israel decreased by 6%. For the first time, global sales amounted to 51% of total sales. It remains to see if Eltek will use the slump in local demand to further strengthen its export orientation.

Global sales totaled $5.0 million, somewhat offsetting the decline experienced in the Israeli market. Sales in Israel amounted to $4.8 million in Q1 2016. North American sales surged by 17% to $1.8 million. In 2015, North American sales grew by 27% form 2014.

Eltek president and CEO Yitzhak Nissan
Eltek president and CEO Yitzhak Nissan

commented that “Our revenues in the first quarter of 2016 were slightly higher than our revenues in the first quarter of last year. During the first quarter we continued to increase our efforts to penetrate global markets, especially the North American market. These marketing activities resulted in $1.8 million of sales in North America, an increase of 17% as compared to the first quarter of 2015. Our total sales to global markets were $5 million, an 8% increase over the first quarter of 2015, and accounted for 51% of our revenues in the first quarter of 2016, compared to 48% of revenues in the first quarter of 2015”.

Eltek is a  a global manufacturer and supplier of technologically advanced solutions in the field of Printed Circuit Boards specializing in the manufacturing of complex PCB’s such as HDI and High-End flexibleand semi flexible multilayered PCB’s. Eltek (NASDAQ: ELTK) is an ISO-9100, NADCAP and ITAR certified. The company is currently (20/05/2016) trading according to a market cap $8.94 million. Eltek’s share weakend considerably in NASDAQ trade, diving as low as $0.92 each, well below the $1.0 mark.

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Posted in: Electronics Industry , News

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