Siltronic AG’s 2020 sales and earnings in line with expectations
Sales and earnings of Siltronic AG (MDAX/TecDAX: WAF) declined in 2020, as expected. Although the fiscal year was characterized by slightly higher-than-expected demand for silicon wafers, at the same time the average selling price per wafer area was below 2019. The strength of the Euro in H2 2020 additionally weighed on sales and earnings.
The surge in digitization triggered by the Corona pandemic generated strong demand for servers, laptops, headsets, monitors and other products. Demand for smartphones and cars showed the first signs of recovery during H2 2020. The recovery in demand was evident in 2020 from quarter to quarter and affected all wafer diameters. However, there were shifts in the end markets due to the corona pandemic, which also negatively affected Siltronic's product mix.
Average selling price per wafer area had declined significantly during 2019. This impacted the average selling prices in 2020. Price pressure eased in the course of 2020. The strength of the Euro, especially against the US dollar and the Japanese yen, led to a decrease in sales of around 30 million euros in H2 2020 compared to H2 2019.
The company continued to work intensively on realizing potential cost-saving opportunities and succeeded in noticeably increasing productivity in most areas.
Siltronic AG's preliminary and still unaudited sales in 2020 were 1,207 million euros, 5 percent below 2019 (1,270.4 million euros).
EBITDA reached around 344 million euros, 16 percent down year-on-year (2019: 408.7 million euros). The EBITDA margin reached a solid 28 percent (2019: 32.2 percent).
Preliminary earnings before interest and taxes (EBIT) were down significantly year-on-year at around 204 million euros (2019: 298.3 million euros), impacted not only by price pressure and the strength of the Euro but also by higher scheduled depreciation. EBIT margin in 2020 was around 17 percent compared to 23.5 percent in 2019.
Siltronic has engaged advisors as part of the voluntary tender offer by GlobalWafers, some of whom are remunerated on a performance basis. In the event of a likely successful tender bid, further costs of a good 10 million euros will be booked, which would impact earnings by the same amount.
In 2020, Siltronic invested around 188 million euros in property, plant and equipment and intangible assets. In addition to basic investments of around 90 million euros, this includes spending on capabilities, capacity expansions and investments in additional epi reactors. This will secure and further expand Siltronic's position as one of the technology leaders.
Preliminary net cash flow of around 77 million euros in 2020 was slightly below the level of the previous year (2019: 81.3 million euros) and thus in line with expectations.
Due to the positive cash flow, preliminary net financial assets decreased by only around 90 million euros to 499 million euros (2019: 588.9 million euros) despite the dividend payment of 90 million euros and the refund of customer prepayments.
“2020 was a challenging year. The Corona pandemic, but also geopolitical tensions have affected the global economy. Accelerated digitization has led to a surge in demand for wafers. Our focus in the past year was again on our technological performance and increasing our productivity," said Dr. Christoph von Plotho, CEO of Siltronic AG.
Business development in Q4 2020
Preliminary sales of around 285 million euro in Q4 2020 were below Q3 (299.2 million euros), as expected. This is due to the further strengthening of the Euro as well as a usual seasonality. Average selling price per wafer area was stable.
Siltronic achieved preliminary EBITDA of around 79 million euro in Q4 2020 (Q3 2020: 80.1 million euro). The preliminary EBITDA margin of around 28 percent was above the level of Q3 (26.8 percent). EBIT was down quarter-on-quarter to 40 million euros (Q3 2020: 43.6 million euro) due to exchange rate headwinds and increased scheduled depreciation. By contrast, EBIT margin fell only slightly from 14.6 percent to around 14 percent.
2021 will be characterized by positive trends, but also by challenges
Possible negative factors for 2021 continue to include geopolitical and global economic developments such as the trade dispute between the USA and China. It is also difficult to predict how the Corona pandemic will develop. Customer inventories are likely to have less of a negative impact on demand development in 2021 than it was the case at the beginning of 2020. However, NAND inventories at memory customers still appear to be elevated.
Megatrends such as 5G, artificial intelligence, electromobility and digitization describe growth drivers for the semiconductor industry. Signs in these areas point to a positive environment in 2021, even if other end markets, like for example the automotive industry, are likely to remain below the level of 2019.
Wafer demand is high and Siltronic’s production loading is good to very good.
Currently, Siltronic expects demand for wafer area to continue to grow in 2021. However, the company expects a significant headwind on sales and earnings development in 2021 due to the continued strength of the Euro. The company still has a high proportion of long-term contracts with customers.
Overall, the company expects a good start to 2021.
A comprehensive reporting with detailed disclosures will be provided on March 9, 2021 when the final results for 2020 will be published. The Executive Board of Siltronic AG will conduct a conference call with analysts and investors (in English only) on that day at 10:00 am (CET). This call will be streamed via Internet. The audio webcast will be available live as well as on demand on Siltronic's website.
March 9, 2021 Publication of Annual Report 2020
April 29, 2021 Ordinary Annual General Meeting
May 7, 2021 Q1 2021 Quarterly Statement
July 28, 2021 Half-Year Report 2021
October 26, 2021 Q3 2021 Quarterly Statement
This press release contains forward-looking statements based on assumptions and estimates of Siltronic’s Executive Board. Although we assume the expectations in these forward-looking statements are realistic, we cannot guarantee they will prove to be correct. The assumptions may harbor risks and uncertainties that may cause the actual figures to differ considerably from the forward-looking statements. Factors that may cause such discrepancies include, among other things, changes in the economic and business environment, variations in exchange and interest rates, the introduction of competing products, lack of acceptance for new products or services, and changes in corporate strategy. Siltronic does not plan to update the forward looking statements, nor does it assume the obligation to do so.
The contents of this press information refer equally to men and women. To aid readability, the male pronoun has been used (e.g. he/his).