Well equipped for a troubled market – Vishay’s financial results and business outlook

Selb / Malvern, PA (USA), 11 November 2008 – Vishay Intertechnology, Inc. (NYSE: VSH), one of the world’s largest manufacturers of discrete semiconductors and passive electronic components, completed the third quarter of 2008 with net revenues of 739 million US dollars. Compared with the second quarter of 2008, this represents a decrease of approximately 4 percent and, compared to the third quarter of 2007, growth of around 2 percent. The consolidated gross margin for Q3 2008 amounts to 21.6 percent, compared to 23.2 percent in Q2 2008 and 24 percent in Q3 2007. For the current quarter, sales are expected to range between 640 and 670 million US dollars, with somewhat lower gross margins. Vishay attributes this to the impact of a weaker euro.

Commenting on the current business climate, Dr. Gerald Paul, CEO of Vishay, stated, “Overall, the last quarter for Vishay and the entire industry has been difficult. Sales and profits have remained lower than expected. The low order intake in October points to a further economic slowdown. Nevertheless, we achieved 0.18 US dollars net earnings per share, and 55 million US dollars from continuing business activities, and generated a free cash flow of 89 million US dollars. In the meantime, the automotive industry in Europe has also suffered from the economic slowdown, as have mobile telephones, computers and consumer goods, which remain below expectations. Conversely, industrial automation is relatively stable, as is military/aerospace. However, orders from global distributors are decreasing rapidly. Should the recession become deeper and longer, Vishay will take all necessary measures to maintain its free cash flow. This also applies to worst-case scenarios.”

Diversification in terms of its products, geography, markets – beneficial in times of crisis
From the start, Vishay has been a financially strong and innovative company, and has established itself as a technical and business market leader. Despite sales losses, the last quarter’s results confirm the Company’s conservative financial policy, which allows it to remain free of debt. Diversification is an important factor in this, as Dr. Paul stresses: “Our geographical distribution is an asset for our international business. Proximity to our customers and location loyalty, both in the USA and Germany, play a major role. Thus, jobs are shifted if necessary, but processes remain at the same location.” During economically difficult times, market diversification helps carry the Company and stands for Company security. Vishay also stresses that no single OEM customer accounts for more than 5 percent of its turnover.

Its broad product portfolio classifies Vishay as a resilient and reliable supplier: Customers have, “in the palm of their hand,” access to an entire range of power electronics from a reliable and economically stable manufacturer. On request, customized development and/or design can be supplied; demand for these rose by a factor of seven from 2004 to 2008, resulting in revenue of 800 million US dollars.
Vishay’s extensive know-how as a broadliner benefits many customers worldwide, with the USA and Europe at the forefront, followed by Asia. The most important market sectors are: industrial automation with 39 percent of the gross income, computing with approx. 19 percent and automotive with approx. 16 to 20 percent.

Acquisition strategy of profitable specialty products
Despite the current downturn, Vishay has pursued a continuous acquisition strategy, as Dr. Felix Zandman, Executive Chairman of the Board and Chief Technical and Business Development Officer of Vishay said: “We will continue our acquisitions and drive organic growth by focused R&D activities.”

Capital investment in the current financial year is at a high level, with some 150 to 160 million US dollars. This is an important milestone in the completion of Vishay’s specialty products offering, which finds itself momentarily in a difficult profitable situation. For example, the acquisition of KEMET Corporation’s wet tantalum capacitor line in September marked a further step in the extension of Vishay’s specialty capacitor product portfolio, which is used in military, aerospace and medical applications.

Dr. Gerald Paul continues: “Any takeover offers new synergies and opportunities for growth. It supports our basic principle of being a “one-stop-shop,” because we offer developers the widest choice of discrete semiconductors and passive components. By creating new products, we can address new markets and drive our vertical growth.”
All acquisitions underscore Vishay’s stable position as a safe and local supplier of high-quality products, regardless of economically turbulent times. Vishay’s share of new products introduced to the market continues to increase and its R&D program is on target. The Company is still committed to the development of its production sites in Germany. In recent years, Vishay has invested large sums in the development and optimization of its German capacity (e.g., conversion of wafer production in Itzehoe for the manufacture of standard 200-mm MOSFETs).

Vishay Intertechnology, Inc., a Fortune 1,000 Company listed on the NYSE (VSH), is one of the world's largest manufacturers of discrete semiconductors (diodes, rectifiers, transistors, and optoelectronics and selected ICs) and passive electronic components (resistors, capacitors, inductors, sensors, and transducers). These components are used in virtually all types of electronic devices and equipment, in the industrial, computing, automotive, consumer, telecommunications, military, aerospace, and medical markets. Its product innovations, successful acquisition strategy, and ability to provide "one-stop shop" service have made Vishay a global industry leader. Vishay can be found on the Internet at http://www.vishay.com.

Editorial contact: Peter Henrici
ph: +1 (610) 407-4899
E-mail: peter.henrici@vishay.com

Worldwide readers’ contact: Vishay Intertechnology, Inc.
E-mail: info@vishay.com
Web: www.vishay.com

This release was published on openPR.