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IPG Photonics announces 2024 financial loss of $162 million

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2025-02-13 14:44:27
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On February 11th, global industrial fiber laser giant IPG Photonics announced its financial performance for the fourth quarter and full year of 2024. Annual sales have fallen below the $1 billion mark for the first time, with a year-on-year decline of 24% and a pre tax loss of up to $162 million.

 



As an industry leader, IPG's financial report not only reflects the deep adjustment faced by the industrial laser industry, but also reveals the pain of traditional giants' transformation in technological iteration and market changes.

The 'midlife crisis' of leading companies: the structural crisis behind core data
From the financial report data, IPG's predicament has exceeded the scope of cyclical fluctuations. In 2024, IPG's fourth quarter revenue was only $234 million, a year-on-year decrease of 22%; The annual sales revenue was 977 million US dollars, a decrease of 24% from 1.29 billion US dollars in 2023. Compared to $1.43 billion in 2022 and $1.46 billion in 2021, IPG's sales have shown a negative growth trend for three consecutive years. This is the first time since its establishment that IPG's annual sales have fallen below $1 billion, which also means that this industry giant has officially entered a "midlife crisis".

In addition, IPG's pre tax profit turned from profit to loss in 2024, with a loss of $162 million, compared to a profit of $275 million in the same period of 2023, a year-on-year drop of about 159%.

It is worth noting that in the transcript of IPG's Q4 2024 earnings conference call, the management clearly mentioned that the sales of IPG's core business unit - high-power continuous lasers - have plummeted by 34% year-on-year, and this pillar product, which once accounted for 60% of revenue, is facing unprecedented challenges.

Industry insiders have analyzed that there are dual factors contributing to IPG's predicament. On the one hand, the liquidation of Russian business caused by the Russia-Ukraine conflict brought about nearly $200 million of asset write downs, directly eroding profit margins; On the other hand, the market environment for industrial laser suppliers remains severe, especially with the phased adjustment of the global electric vehicle industry chain leading to a slowdown in the expansion of power battery production, which is a high growth market that IPG has been focusing on in recent years. According to relevant data agencies, the global power battery capacity utilization rate has dropped to 58% in 2024, and the equipment procurement delay rate of top enterprises has exceeded 30%.

Strategic Restructuring: The New CEO's Three Arrows to Break Through the Game
CEO Mark Gitin, who will take office in June 2023, admitted during the earnings conference call that "global industrial demand is still in the bottom zone." However, he also presented three cards for transformation:

Medical Blue Ocean: Breakthrough of Thulium Laser in Urology
The latest thulium laser kidney stone treatment system developed by IPG targets the global urology laser market with a scale of over 1.2 billion US dollars. This technology can shorten surgical time by 40% and has signed contracts with two international medical device giants, with the first revenue expected to be generated by the end of 2024. This move marks IPG's official entry into the medical device race, competing with traditional players such as Boston Scientific and Olympus.

Cost Revolution: 'Winning Big with Small' for 40kW Laser
The YLS-RI series lasers released at SPIE Photonics West have achieved a 40 kW output power and the same volume as a 4 kW device through a pump laser diode architecture innovation, reducing costs by 30%. Gitin believes that this is a key weapon to deal with the price war among Chinese manufacturers.

It is understood that the price of China's 10000 watt laser is only one-third of similar products in Europe, and the global competitive landscape has undergone fundamental changes. Chinese manufacturers have significantly reduced the BOM cost of 10000 watt lasers and enhanced their terminal pricing ability through self-developed core components such as pump sources and fiber Bragg gratings, directly impacting IPG's market share in China. According to relevant industry data, the price of 10000 watt level lasers in China has dropped from 1.5 million yuan in 2020 to 600000 yuan in 2024. This technological upgrade by IPG may reshape the competitive landscape.

Supply Chain Resilience: Global Layout of Tariff Firewall
Faced with the potential risk of tariffs imposed by the United States on China, CFO Tim Mammen disclosed that IPG has completed its "multipolar manufacturing" layout, with Russian production capacity transferred to Germany and new factories in the United States about to start production. According to relevant sources, this "dual circulation" model between Europe and America can keep the impact of tariffs within 2% of revenue, forming a comparative advantage compared to peers who rely on China's supply chain.

Financial health: survival chips in the cold winter
Despite a 40% drop in IPG's stock price this year and a market value of $2.5 billion, IPG's balance sheet remains robust: over $900 million in cash reserves provide a buffer space for its transformation. Compared to peers, Coherent's cash ratio is only 0.3, while its IPG is as high as 1.2, which forms a critical safety cushion during industry downturns.

IPG expects its revenue in the first quarter of 2025 to remain stable or slightly decrease compared to the previous quarter, with the main growth momentum to be released in 2026. Some industry insiders believe that the transformation of IPG needs to cross a gap period of 18-24 months, during which the stock price may continue to be under pressure.

Technical route dispute: the "moat" crisis of fiber lasers
The deeper crisis comes from the disruption of technological routes. With the breakthroughs of Chinese manufacturers in the fields of semiconductor lasers, high-power lasers, and ultrafast lasers, the fiber laser market dominated by IPG is facing a diversion.

According to the "2024 China Laser Industry Development Report", in 2024, domestic Chinese companies such as Ruike Laser, Jept, and Chuangxin Laser shipped 21000 units of domestically produced 10000 watt fiber lasers, a year-on-year increase of 40%.

In Ruike Laser's 2024 semi annual report, it was pointed out that the company's sales of high-power lasers of 10kW and above increased by 135% year-on-year, and the market share increased to 38%. In Jept's 2023 annual report, it was pointed out that the company's shipment of 10000 watt level lasers exceeded 4000 units in 2023, and the year-on-year increase in Q1 2024 orders reached 60%.

Several laser manufacturers in China have lowered their equipment prices to 60% of IPG's similar prices through localized supply chains. According to relevant data, the localization rate of laser equipment in China has jumped from 45% in 2020 to 78% in 2024, mainly driven by equipment replacement in the fields of new energy and semiconductor. Among them, the localization rate of high-power fiber lasers exceeds 85%.

Traditional fiber lasers are undergoing a transformation of replacing feature phones with smartphones. A high-end manufacturing analyst from a leading securities firm pointed out that for every 1 percentage point increase in the penetration rate of ultrafast lasers in the precision machining field, they will replace the traditional laser market worth about 300 million US dollars. This precisely explains why the proportion of IPG's research and development expenses has increased to 12%, but it is difficult to prevent the decline in gross profit margin - its main focus on high-power products above 6kW is facing the impact of dimensionality reduction from emerging technology routes while the demand in the new energy field is weakening.

At the end: The dangers and opportunities of the industry reshuffle period
The current industrial laser market is undergoing a deep reshuffle. Several international giants are also facing shrinking profits, while Chinese manufacturers are growing against the trend with localized demand for new energy vehicles, energy storage, and other products. According to relevant predictions, the global laser equipment market is expected to experience a 6% growth by 2025, but the growth momentum will shift towards sub sectors such as semiconductors and healthcare.

For IPG, short-term pains may be difficult to avoid, but its reserves in cutting-edge fields such as excimer laser and beam tunable technology are still competitive. As IPG has stated, the company is not only undergoing market adjustments, but also a revolution that redefines industrial processing methods. When laser technology evolves from a "cutting tool" to a "gateway to intelligent manufacturing," the ultimate outcome of this transformation may reshape the entire industry landscape.

In the deep waters of Industry 4.0, the transformation path of IPG is like a metaphor for its laser beam - it requires sufficient focus to penetrate fog, and every degree of deviation in direction adjustment may determine the final destination of the beam. The effectiveness of the new CEO's combination of "healthcare+cost reduction+regional restructuring" may only be revealed in the 2026 financial report. But what can be confirmed is that the value chain reconstruction of the global laser industry has already begun.

Source: OFweek

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