Q1-Q3 / 2019/20

AT&S remains strategically well on track

  • Market upheavals and economic climate have adverse effects on earnings figures so far this year
  • Nine-month revenue down slightly by 4.7%, EBITDA margin still within the target range at 20.8%
  • AT&S adjusted outlook for the financial year 2019/20 due to coronavirus
  • Medium-term guidance confirmed

Leoben – In the first three quarters revenue amounted to € 753.2 million. The decline by 4.7% is primarily attributable to changes in the product mix in the Mobile Devices segment and to a decline in demand in the Industrial segment. The Automotive segment maintained the level of the previous year despite the current transformation of the mobility market. The IC Substrates and Medical & Healthcare segments recorded growth as expected.

In addition to the current market situation (trade conflicts, Brexit), substantial future investments in the strategic expansion of business in the form of higher R&D expenses have led to comparatively lower earnings. EBITDA fell by 29.1% to € 156.4 million (previous year: € 220.5 million). The EBITDA margin declined by 7.1 percentage points to 20.8%. However, it was within the target range despite the decrease. EBIT amounted to € 47.7 million (previous year: € 121.5 million), which corresponds to an EBIT margin of 6.3% (previous year: 15.4%). Finance costs – net declined from € -2.6 million to € -3.3 million, which was predominantly due to currency differences.

A few months ago, AT&S started to expand the production capacity for IC substrates at the sites in Chongqing and Leoben in cooperation with a leading manufacturer of semiconductors. The investment volume totals up to € 1 billion over the coming five years. In view of its high earnings power, AT&S will fund this new project primarily from existing financing facilities and operating cash flow.

The company currently focuses especially on the following areas:

  • 5G: The new transmission standard and the launch of new smartphones supporting 5G will stimulate demand for high-end printed circuit boards.
  • Module business. As part of the “More than AT&S” strategy, the systematic expansion of the modules segment is opening up new business opportunities. Especially in the consumer segment, even more printed-circuit-board-based solutions for miniaturized electronics in very small space will be required. AT&S is therefore pooling its expertise, and launches the second expansion phase at the Chongqing II plant for the production of modules e.g. for smartphones and wearables.
  • Big data: With the massive increase in data, the demand for high-performance microprocessors is also growing. The demand for IC substrates for this application is expected to rise by 11% annually until 2024. Based on the additional capacities (+90%), AT&S will be able to meet a significantly higher demand as soon as the financial year 2020/21.

Andreas Gerstenmayer, AT&S CEO: “The trend of miniaturization and modularization addresses many applications in the electronics industry as well as the area of microprocessors. Future investments will enable us to strengthen the position in the market for IC substrates and to further balance our product portfolio.”

The financial position remained solid at the nine-month reporting date. As a result of additions to assets and technology updates, total assets were up 6.7% to € 1.9 billion. Equity decreased by 6.3% to € 752.6 million, which was essentially due to negative currency effects, the dividend payout and a payment to the owners of the hybrid bond. The equity ratio declined by 5.4 percentage points to 39.6%, and is still at a high level. Net debt rose by 23.6% from € 150.3 million to € 185.8 million.

Cash and cash equivalents totalled € 432.7 million. In addition, AT&S has financial assets of € 191.9 million and unused credit lines of € 236.5 million to secure financing of the future investment program and repayments due in the short term.

FINANCIALS
Acc. to IFRS; (in EUR million)
2018/19
01.04.2018-31.12.2019
2019/20
01.04.2019-31.12.2019
Change
Group
Revenue790.1753.2(4.7%)
EBITDA220.5156.4(29.1%)
EBITDA margin (in %)27.920.8
EBIT121.547.7(60.8%)
EBIT margin (in %)15.46.3
Profit/loss for the period92.325.2(72.7%)
Cash flow from operating activities153.2176.715.3%
Net CAPEX63.2145.5>100%
Net debt150.3*185.8**23.6%
Earnings per share (in EUR)2.210,49(78.0%)
* As of 31.03.2019
**As of 31.12.2019

The spreading of the coronavirus disease is currently impacting the production of AT&S in China. Due to this development, revenue will fall short of expectations in the fourth quarter of the current financial year. AT&S therefore adjusted its revenue and earnings forecast (previously: revenue at the prior-year level of € 1,028.0 million; EBITDA margin between 20% and 25%) and expects revenue to amount to € 960 million, with an EBITDA margin in the range of 18% to 20%.

Subject to staff availability, the plants in Shanghai and Chongqing II will start production in the week of 10 February 2020 after extended New Year’s holidays. The Chongqing I plant resumed production at reduced capacity after the New Year’s celebrations as planned. AT&S currently considers the following aspects to influence the development in the coming months: a deterioration of the current general conditions, the provision of production materials and personnel, processes in the supply chain and the demand situation.

The figures projected for investments for the year are more precise now: Expenditures for basic investments (maintenance and technology upgrades) still range between € 80 and 100 million. Expenditures for capacity and technology expansions which depend on the market development are expected to total € 40 million (forecast H1: € 100 million). The funds will largely be used to start the second expansion phase of the module business in Chongqing II. Investments of € 130 million (previously: up to € 180 million) can be expected for the capacity expansion in the area of IC substrates. The Group’s capital expenditures will therefore total up to € 270 million (H1: up to € 340 million) for this financial year. The adjustments merely result from short-term management and, consequently, shifts of periods between financial years. The total investment volume for the IC substrate capacity expansion (Chongqing I and III) remains unaffected.

Therefore, the medium-term guidance continues to apply: As part of the strategy “More than AT&S”, the Group expects revenue to double to € 2 billion in the next five years. This corresponds to a compound annual growth rate (CAGR) of roughly 15%. Taking into account a stable base business, this growth is based above all on the full expansion of the plants in Chongqing. Due to the stronger focus on high-end applications, the historical trend of continuous and sustainable margin improvement can be continued, and an EBITDA margin in the range of 25% to 30% can be achieved in the medium term. The Group’s medium-term ROCE target is more than 12%.

AT & S Austria Technologie & Systemtechnik AG – First choice for advanced applications
AT&S is the global market leader for high-end printed circuit boards and one of the globally leading manufacturers of IC substrates. AT&S industrializes leading-edge technologies for its core business segments Mobile Devices, Automotive, Industrial, and Medical. AT&S has a global presence, with production facilities in Austria (Leoben and Fehring) and plants in India (Nanjangud), China (Shanghai, Chongqing) and Korea (Ansan, near Seoul). The company employed an average of about 10,000 people in the financial year 2018/19.

Press contact:
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Gerda Königstorfer, Director Investor Relations
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February 4, 2020 7:19 Published by