Q1-Q3 2018/19

Published On: January 30, 20193.9 min read774 words

AT&S reports increase in revenue and excellent profitability in the first nine months

  • Broad product portfolio supports positive business development
  • Very strong demand for IC substrates and in the Medical & Healthcare segment
  • Weaker demand in Mobile Devices in the third quarter
  • Slight increase in revenue to € 790.1 million
  • EBITDA up nearly 16% mainly due to efficiency increases
  • Better profitability with an EBITDA margin of 27.9% and an EBIT margin of 15.4%
  • Outlook for 2018/19: revenue growth of around 3% and EBITDA margin of 24 to 26%

Leoben, January 30, 2019 – In comparison with the same period of the previous year, AT&S increased revenue and significantly improved earnings. “After a very positive first half-year, the demand for mobile devices declined towards the end of the third quarter. Thanks to the broad product, technology and customer portfolio, we were nevertheless able to match the exceptionally high level of the previous year,” AT&S CEO Andreas Gerstenmayer commented on the current development.

Accumulated revenue rose by 3.2% from € 765.9 million to € 790.1 million. Sales increases for IC substrates and in the Medical & Healthcare segment partially offset the decline in demand recorded in the Mobile Devices, Automotive and Industrial segments in the third quarter. Exchange rate effects, especially the weaker US dollar, had a negative impact on the revenue development. Positive effects resulted from the application of the new accounting standard (IFRS 15).

EBITDA increased by 15.9% from € 190.3 million to € 220.5 million. The increase primarily results from efficiency and productivity improvements, the absence of the start-up costs incurred in Chongqing in the previous year and a favourable product mix. This result was supported by positive currency effects. The EBITDA margin amounted to 27.9% in the first nine months, an increase of 3.1 percentage points compared to the previous year level of 24.8%.

EBIT improved from € 88.8 million to € 121.5 million. The EBIT margin amounted to 15.4% (previous year: 11.6%).
Finance costs – net improved significantly from € -11.3 million to € -2.6 million. Although gross debt was substantially higher than in the previous year, gross interest expenses, at € 9.6 million, were lower than the prior-year level of € 10.8 million due to optimisation measures carried out subsequent to the hybrid bond. Interest income of € 3.1 million exceeded the prior-year level of € 0.7 million. This increase resulted primarily from the improved interest environment in the USD area. Exchange rate effects had a positive impact of € 6.5 million on finance costs (previous year: income of € 2.0 million).

Statement of financial position and cash flow
Based on this increase in equity and the higher total assets resulting from the issue of the promissory note loan, the equity ratio, at 42.9%, was 3.6 percentage points lower compared to 31 March 2018. Net debt declined by 34.7% from € 209.2 million to € 136.7 million. Cash flow from operating activities amounted to € 153.2 million in the first nine months of the financial year 2018/19 (previous year: € 121.0 million).

Acc. to IFRS; (in EUR million)Q1-3 2017/18Q1-3 2018/19Change
EBITDA margin (in %)24.827.9
EBIT margin (in %)11.615.4
Profit for the period47.892.393.1%
Cash flow from operating activities121.0153.226.6%
Net CAPEX124.663.2-49.3%
Equity ratio (in %)46.5*42.9**-
Net debt209.2*136.7**-34.7%
Earnings per average number of shares outstanding (in EUR)1.212.2183.2%
* At 31.03.2018
** At 31.12.2018

Mobile Devices & Substrates segment increases profitability
Although the positive business development continued, the demand for mobile devices started to weaken in the third quarter of 2018/19. The segment benefited primarily from a higher-value product portfolio of IC substrates. Accordingly, the segment’s revenue increased by 3.7% from € 580.0 million to € 601.5 million. Exchange rate effects had a negative impact of € 10.8 million on the reported revenue.

EBITDA improved by 14.1% from € 155.3 million to € 177.2 million. The significant increase in earnings primarily resulted from the successfully implemented efficiency and productivity improvement measures and the absence of start-up costs in Chongqing. This effect was supported by a higher-value product portfolio of IC substrates and positive currency effects. Overall, the segment recorded an EBITDA margin of 29.5%, which significantly exceeded the comparative value of 26.8% in the prior-year period.

Automotive, Industrial, Medical segment at the level of the previous year
The segment’s revenue, at € 270.6 million, was at the level of the previous year. Strong demand was recorded in the Medical & Healthcare sector in the first nine months, while demand in the other two sectors was slightly weaker.

The segment’s EBITDA, at € 38.3 million, exceeded the prior-year figure of € 32.3 million by € 6.0 million. The contribution to earnings from a better product mix and positive currency effects compensated for a decline in volume.

Outlook for the financial year 2018/19
Based on the current market development, especially the current weakness in demand in the Mobile Devices and Automotive segments, the Management Board now expects revenue growth of around 3% for the financial year 2018/19 (previously 6 to 8%). The Management Board confirms an EBITDA margin of 24 to 26%, which is supported primarily by efficiency and productivity improvement measures and a higher-value product portfolio of IC substrates.

Based on investments for the second expansion phase at plant 1 in Chongqing leading to cash outflows at a later time, total investments will amount to roughly € 100 to 120 million for the financial year 2018/19 (previously roughly € 140 to 160 million), with maintenance investments still expected at the planned level.