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AVX Corporation Reports Earnings Increase of 71%

April 29, 2011 | About:
ABN

ABN

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AVX Corporation, the South Carolina-based electronic components manufacturer, reported preliminary full year results to March 31 with a 71% increase in net income to $244.0 million and 82.5% increase in diluted EPS to $1.46.

Chief Executive Officer and President John Gilbertson said, “We are encouraged by the overall outlook for the electronic component industry as end user demand for electronic products continued to increase as evidenced by the strong bookings we received throughout the fiscal year.

While global economic conditions remain difficult to predict, we have seen both an improvement in demand levels as well as customers’ desire to place longer-term orders for most markets. We were deeply saddened by the natural disaster that struck Japan in March but the impact has not been significant to our business as a result of the crisis. Yet the potential future impact on the industry supply chain is uncertain.”

Further details are sparse but the 26.7% increase in revenues appears to be a continuation and improvement on the third quarter results when net sales increased 21.2% as a result of higher volume which was reported across all markets. In the December filing the company said the growth reflected an improvement in global demand driven by improved economic conditions and increased demand for devices like smart phones, automobiles and tablet PCs which in turn require increased electrical component content.

AVX’s 15% annualized growth rate since 2005 has attracted the attention of several Gurus including Joel Greenblatt and Third Avenue Management. However, even after a sharp rise of around 7% following the earnings release, the stock still (as of April 28) only trades on a PE multiple of 12.9.

Business Overview

AVX is a worldwide manufacturer and supplier of a range of passive electronic components. Virtually all types of electronic devices use these products to store, filter or regulate electric energy. AVX is 71% owned by Kyocera Electronics Corporation.

The company has manufacturing, sales and distribution facilities located throughout the world which are divided into three main geographic regions (the Americas [approximately 30% of sales], Asia [approximately 45%] and Europe [approximately 25%]) and three product divisions(reselling products manufactured by Kyocera , Passive Components [primarily for automotive braking, cell phones, copiers, hearing aids, and locomotives] and Connectors [primarily used in the automotive and medical industries]).

AVX’s customers are electronic equipment manufacturers in a broad array of industries, such as telecommunications, information technology hardware, automotive electronics, medical devices and instrumentation, industrial instrumentation, defense and aerospace electronic systems and consumer electronics.

Disclosure: The author has no long or short positions in AVX Corporation.

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