IPG Beats First-Quarter Revenue Forecast, Offers Update on Russian Business
IPG Photonics reported first-quarter revenue of $370 million, driven by higher demand in Europe, North America, and Japan. The earnings report exceeded analysts’ revenue forecast, which was in the range of $340 million, as well as IPG’s own guidance.
Company CEO Eugene Scherbakov cited revenue from welding as a contributor to the 7% year-over-year revenue increase. He identified opportunities in electric vehicle batteries and automotive production as individual drivers. Demand for laser welding in general manufacturing and in medical and hand-held applications further supported the strong quarter.
Scherbakov, as well as CFO Timothy Mammen, also provided updates on the company’s operation in Russia. The company previously announced plans to qualify third-party suppliers for certain components to reduce reliance on its Russia operations. It said Tuesday that it would accelerate these activities into the next quarter.
IPG said it is executing on contingency plans it outlined in March in response to the situation in Eastern Europe. Scherbakov added that the company has started hiring additional employees, allocating workspace for increased production, and running second shifts in its U.S.-, Germany-, and Italy-based facilities. He said that the company is using the situation to introduce new production technologies and automation to increase yields and productivity. According to Mammen, IPG will spend 2022 capital expenditures previously budgeted to be spent in Russia on investments to de-risk its internal supply chain.
Scherbakov reiterated the company’s recognition of the risk of operating in Russia in prepared remarks. IPG expects higher import duties and tariffs on Russian source components and continued elevated shipping costs to affect its margins.
IPG’s Russian operations supply finished products for the Chinese market. As the company aims to reduce reliance on manufacturing in Russia and has stopped new investments in the region while increasing manufacturing capacity in North America and Western Europe, it reported that China’s share of revenue decreased to 35% this quarter.
The company reported that revenue in high-power continuous-wave lasers, which represented approximately 45% of total revenue in the quarter, declined 2% year-over-year due to softer demand in high-power cutting applications in China. Growth in welding, including in China, partially offset the decline. IPG recently released the third generation of its LightWELD hand-held laser welding device.
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