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15

April 2020

IMI 2020 ANNUAL STOCKHOLDERS’ MEETING MESSAGE FROM THE PRESIDENT & CEO

IMI ASM SPEECH
2020 ANNUAL STOCKHOLDERS’ MEETING
MESSAGE FROM THE PRESIDENT & CEO ARTHUR R. TAN
APRIL 15, 2020

Fellow Shareholders,

We ended 2019 reflecting on the achievements we accomplished and at the same time learning from the challenges we were able to overcome despite the business constraints we faced. Last year proved to be more volatile than we had anticipated as it brought about heightened sense of risk and uncertainty.

Last year, geo-political issues further strained the electronics manufacturing industry which had just begun recovering from a component supply chain imbalance which had peaked the year prior. Along with a confluence of other factors, key business cycle indicators pulled back such as global semiconductor sales and semiconductor manufacturing equipment sales which sank 12% and 10.5% year-over-year, respectively.  

Across the manufacturing end-markets, automotive emerged as the most affected segment reflecting the negative impact of the U.S.-China trade dispute and market adjustments to new emissions standards. This caused production to drop by 4% globally, led by China whose automotive output declined by 8%.  

Against this backdrop of weakened trading conditions, revenues slightly weakened year-on-year by 7 percent to US$1.25 billion following a slowdown in the consumer, telecommunications and industrials segments. The slowdown in global growth, strains on supply chain and significant investments in capacity and technical capabilities into future growth areas that increased company overhead expenditures brought full year performance to a net loss of US$7.8 million.

However, despite the headwinds, the pipeline remains healthy with the significant new projects we won in 2019 worth $407 million of annual revenue potential. In fact, as we continue to drive the development of next generation platforms, we were even able to grow our automotive segment by 9% from the previous year, completely outpacing the market.

Business wins related to the automotive camera continue to rise and provide IMI with leverage in offering more advanced technologies such as mirror replacement and camera-video system level modules. Revenues in this group is seen to double to US$ 124 Million in the next five years.

Beyond sales and profitability, our reputation as a leading intelligent solutions provider in automotive, industrial and aerospace markets continue to reinforce our partnerships with more opportunities in the face of newer and faster technologies. In many ways, IMI is learning and finding its niche in higher value markets and expanded levels of the standard business models in electronics manufacturing. With our experience and reputation, we get to collaborate with the best in the industry in project management from design concept to manufacturing and delivery while investing on our future. To illustrate, back in 2018, among the products that we built, only about 30% of these were classified as those belonging in emerging technologies. By the end of 2019, that number rose to 44%.

These activities and developments are all consistent with IMI’s trajectory over the past ten years. Over this period, the compounded annual growth rate of IMI registered at 13% resulting in the tripling of the company’s global size.

Since 1980, IMI has always adhered to two principles as we continue to strive for growth: that we operate and deliver with the highest level of commitment and service to our current customers; and that we have the right people, skillsets and technologies that will enable us to withstand negative market forces in the foreseeable future. Arguably, the electronics industry is among the most volatile markets in the world.

As we learn and benefit from our experiences in the past and present, IMI, now a global company that started as a domestic Filipino integrated circuit assembler, has become the 17th largest electronics manufacturing services (EMS) company as of the end of 2018 and the 5th largest in the automotive EMS space.

Today, in addition to its independent mandate as one of the world’s leading electronics manufacturing services firms, IMI also holds the core manufacturing competencies of AC Industrials, Ayala’s industrial technologies group. IMI’s manufacturing prowess will continue to enable AC Industrials and its portfolio of businesses in automotive engineering & design, vehicle distribution & retail, and smart solar technology.

As a global company, IMI will continue to be a leading technology solutions partner in the mobility, connectivity and smart energy spaces, providing higher value contributions in design, collaboration, manufacturing and delivery to major Brands, Original Equipment Manufacturers and Tier One Suppliers in the global automotive and industrial segments.

As IMI enters its 40th year in 2020, and with the digital age at the forefront of global megatrends, our corporate values of integrity, customer focus, concern for others and excellence remain as strong as ever in our more than 17,000 employees worldwide. We believe these are the true drivers of success that will continue to push us to stay at the edge of innovation, creativity, collaboration and design. At the same time, we will remain true to our aspirations and our goals as we integrate sustainability, risk management and corporate governance in our global strategies. We share in the commitment our parent company ACI and principal Ayala Corporation, to address long term targets in the UN Sustainability Development Goals.

Today, with our 22 manufacturing sites and in 10 countries, providing services beyond the standard deliverables of electronics manufacturing, we will continue to aggressively press forward in exploring synergies, partnerships and ventures in the areas of new technologies and markets. With the age of intelligence and digitalization reinventing conventional business models and supply chains across global markets, we at IMI have put in place the essential elements needed for us to work with the leading players in the world.

As I speak, the current challenges of the Corona virus pandemic affecting the entire global market in unprecedented ways is upon us. It is a very dynamic situation as all the countries and their respective economies will enter and exit this situation independently. This single event may have hastened a new world order in the way we live our lives and operate businesses.

As a global manufacturing partner, we have had systems in place to prepare for these kinds of market disruptions. These systems are currently enforced in some of our sites today. In addition, our diverse manufacturing capabilities across all the major markets puts IMI in a unique position to not only survive this event but to rebuild and emerge stronger and better. Today, part of our operations sustain and support most of the essential industrial and medical products that the world desperately needs.

To all our stakeholders, thank you for your trust guidance and support that have enabled us to remain a robust and enduring company now and for the decades to come.

Together, we are now ready for more giant leaps into the future.