What happened
Shares of high-tech laser maker IPG Photonics (NASDAQ: IPGP) crashed in morning trading Thursday, and were down 8% as of 10 a.m. ET.
In contrast to a whole series of companies that have announced they are cutting ties with Russia in response to that country's invasion of Ukraine last week, IPG Photonics this morning said that it's keeping its Russian operations open.
Image source: Getty Images.
So what
Specifically, IPG Photonics affirmed that its "Russian facilities continue to operate and manufacture optical components and finished products for its operations in the U.S., Germany and China."
As the company explained: "IPG has major production and R&D facilities as well as close to 2,000 employees located in Russia. These facilities supply components that Germany and the U.S. use in production and provides finished products to China and the U.S." In the case of China specifically, about $100 million of finished product.
IPG called sales within Russia "nominal, totaling $30 million in 2021," while playing up the global need for it to continue operating within Russia:
IPG already has built several months of critical inventory in Russia to support sales. The Company's Russian facility is currently able to ship optical and other components to IPG affiliates from Russia. In the event that sanctions or other developments resulting from the ongoing Russia-Ukraine war substantially limit IPG's ability to export optical or other components to or from Russia, the Company's sales may be materially impacted.
Now what
The potential for "materially impacted" sales can't be discounted. To minimize the risk, IPG says it is looking to increase manufacturing capacity "in Germany and the U.S., and qualifying third-party suppliers to reduce reliance on Russian operations." But this will take six to nine months to accomplish.
In the meantime, IPG warns that it must now withdraw its previously issued guidance for sales of $320 million to $350 million in the first quarter of 2022 and sales of $1.5 billion to $1.55 billion for all of 2022.
Investors are predictably upset.
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