ADVA Q4 benefits from cost-cuttingADVA Q4 benefits from cost-cutting

ADVA, an optical networking supplier based in Germany, seems to be having – if there is such a thing – a "good" pandemic. True, revenue fell by 7% in Q4 year-on-year to €140.6 million ($172 million), but that was primarily due to the devaluation of the US dollar compared to the euro.

Perhaps the most eye-catching development was a 140.6% rise in operating income over the same period, to a shade over €13 million ($15.9 million), even if the comparative smallness of the base helped explain the large percentage increase.

ADVA said cost improvement measures introduced in 2019, as well as reduced discretionary spending, helped here. Q4 also benefited from lower US tariffs due to the relocation of production facilities out of China.

Pro forma operating income for Q4 was €14.3 million/$17.5 million (10.2% of revenues) compared with €10.3 million ($12.6 million) in the same quarter the year previously (6.8% of revenues). Q4 net income, at €13.2 million ($16.1 million), was up a healthy 425.3% year-on-year.

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"Growing safety concerns, specifically around the major Chinese equipment suppliers, create new opportunities and unique selling points for us that further strengthen our market position," claimed ADVA CEO Brian Protiva.

Protiva added that the company was benefitting from growing revenue contributions from software and services, as well as "expansion into new industries and further verticalization of our business."

CFO exuberance

ADVA CFO Uli Dopfer was gushing in his praise for the full-year 2020 results, which saw revenues increase 1.5% year-on-year to just under €565 million ($691 million), and pro forma operating income jump by 36.4% to €33.8 million (6% of revenues). "We're reporting today one of the most successful financial years in the company's history," he said.

"We are very confident about the coming year and started the new quarter with a well-filled order book and a favorable customer and product mix," added Dopfer.

— Ken Wieland, contributing editor, special to Light Reading