Milestones adding up
Thin Film Electronics ASA (OL:THIN) (OTC: TFECF) has reported Q315 results showing a 3.5% q-o-q decline in revenues and a 19.3% q-o-q increase in operating losses, mainly due to lumpy grant revenues and rising external development costs resulting from the ramp-up of production capacity. The key milestones during the quarter were Xerox’s announcement of the launch of Thinfilm labels, the placing of a pilot order by Diageo, and Ypsomed announcing its intention to use NFC OpenSense in autoinjectables. We see the potential for news of further new order inflows, progress in capacity expansion and in product development to further increase interest in the stock in coming quarters.
Q3 results affected by increased development costs
The 3.5% q-o-q revenue decline and 19.3% q-o-q increase in operating losses reported by Thinfilm in Q315 reflected lumpy grant revenues and the need to spend more on external development costs in gearing up to volume production. During the quarter, largely due to increased capex and higher EBIT losses, cash burn was $9.5m before FX effects, not far off the $8.4m of Q2, leaving net cash of $24.6m. As a result of the longer than expected gap between pilot and first volume orders for Thinfilm’s key products (EAS and NFC OpenSense) and the above mentioned higher than expected development costs, we have increased our forecast normalised losses per share for 2015 and 2016 by 2.7% and 24.6%, respectively.
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