MALMO, Sweden, May 2, 2002 (PRIMEZONE) -- AudioDev AB (publ.):
(Figures within parentheses refer to the period January-March 2001)
-- Net sales amounted to SEK 36.5 (29.6) million.
-- Operating income amounted to SEK 1.7 (1.9) million.
-- Improvement in orders received during March, 28 MSEK, and April, 30
MSEK, compared to the order rate during the second half of the year
2001 and January and February 2002.
Jan-Mar Jan-Mar Change % Jan-Dec
2002 2001 2001
Net sales, SEK millions 36.5 29.6 23 215.1
Operating income, SEK
millions 1.7 1.9 -11 39.7
- as % of net sales 4.7 6.4 18.5
Income for period,
SEK millions 1.2 1.2 0 32.1
- as % of net sales 3.3 4.1 14.9
Volume of orders,
SEK millions 17.1 103.5 -83 7.7
The AudioDev Group
AudioDev is an international market leader in the field of testing equipment for optical media such as CDs and DVDs. With a market share of 35 percent (according to our own estimates) and a unique product range in a key growth area, AudioDev holds the strongest position in its segment of a rapidly expanding market. The base of the Company's operations is the market for optical media as a whole. The actors in this market are the content providers (film companies, record companies, computer gaming companies, etc.) who use CDs and DVDs to distribute their products, and the manufacturers of optical media and players for these media types. AudioDev is a supplier of production equipment for the optical media market and a leading actor in the testing equipment niche.
The Company's Market Position
Since its start in 1987, AudioDev has developed the de facto standards for how optical media are tested. The Parent Company has its headquarters in Malmo, where our operations are based. Subsidiaries are found in the USA and Hong Kong. In addition, AudioDev has built a network of agents in every land and region of noticeable importance. None of the Company's competition has the same global presence. Our customers include Technicolor, Ritek Global Media, Microsoft, EMI, Samsung, Warner, Sonopress, Pioneer, Cinram, Panasonic, MBI, DAI Nippon Printing, and CMC.
Four Factors that Drive the Demand for Testing Equipment
1. Demand for optical media is increasing. Consumers buy music on CD, store information on CD-R, watch films on DVD, play computer games on DVD-ROM, and so on. 2. New optical formats are introduced at an increasing rate. Recordable and rerecordable DVD-format, DVD-ROM, and DVD-Audio (audio discs with higher capacity than CD) are a few examples. DVR is the next generation of optical media, with greater storage capacity and better image quality. 3. Complexity is increasing. For each new format, the test requirements increase. 4. Development of existing formats. Product development of an established format places new demands on quality testing.
Strong Development in the Market for Optical Media
Even if the demand for test equipment does not exactly follow the market for optical media, developments within this underlying market provide a picture of investment needs within the industry. During 2001, all these markets have experienced positive and steady development. For DVDs and CD-Rs, growth has even been higher than expected. The only media that is decreasing is CD.
During 2001, the number of sold DVDs equalled SEK 1.2 billion (650 million), according to the British research firm Understanding & Solutions (published during the second half of 2001). Growth is driven by the USA, which with its 563 million DVD discs (294) sold was responsible for nearly half the world's market. In total, the sales of DVDs in various formats are expected to increase by 70 percent during 2002.
Much points towards DVD R/RW making a major breakthrough during 2002. The forecast from Understanding & Solutions shows an increase from about 25 to 170 million discs sold during the year. Within DVD-ROM, the market trend also indicates a strong increase.
For CD and CD-ROM, investments are expected to continue on a low level, as both formats are in a mature phase of the product lifecycle. CD-R is expected to increase by 20 percent during 2002.
Irregular Growth in the Market for Production Equipment
Demand for testing equipment is dependent upon the demand for optical media, but displays a different pattern. When an optical media, such as recordable DVDs for example, gains acceptance in the consumer chain, a large demand for testing equipment arises among the manufacturers. These have a tendency to over invest, which regularly leads to surplus capacity for a certain period. Then comes a new period of major investment, followed by a new period of stagnation - repeating until growth declines and the media enters a mature phase, where the demand for testing equipment is primarily comprised of re-investments and service and the like.
AudioDev's Operations January-March 2002
As forecast in AudioDev's Year-End Report from 12 February 2002, the first quarter was characterised by weak demand for test equipment for both CD and DVD media. However, the level of orders received improved in March, 28 MSEK, and April, 30 MSEK, compared to the order rate during the second half of the year 2001 and January and February 2002.
Orders Received and Volume of Orders
Orders received during the period amounted to SEK 45.9 (88.0) million and primarily concerned DVD and DVD R/RW equipment in the Asian and American markets. The volume of orders amounted to SEK 17.1 (103.5) million at the end of the period. The large volume of orders at the end of the same period last year is explained by the fact that the figure includes the orders for Xbox and Moser Baer.
Net Sales
Net sales amounted to SEK 36.5 (29.6) million during the period. The lion's share of the sales concerns DVD analysers totalling SEK 31.4 (13.9) million. Sales of DVD R/RW continue to increase strongly and accounted for 26% (0%) of net sales during the period
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