Siltronic closed financial year 2015 successfully and expects results to develop positively in 2016
Siltronic AG, the world's third-largest manufacturer of hyperpure silicon wafers, had another successful year in 2015. Sales of the TecDAX-listed company increased to EUR 931.3 million in 2015, up 9.1 percent year on year (2014 adjusted: EUR 853.4 million). This significant rise was mostly due to higher unit sales and a strong US-Dollar against the Euro.
"2015 was a milestone for Siltronic with the IPO in June. We closed the financial year successfully despite the fact that the positive trends at the start of the year did not continue through to the end of the year due to the economic slowdown in the semiconductor industry. However, we were able to hit most of the targets that we had set ourselves at the beginning of 2015.”, said Dr. Christoph von Plotho, President & Chief Executive Officer of Siltronic AG. "We successfully continued our cost-saving program. The development of new products in collaboration with our customers helped us to unterpin our technology leadership.”
Manufacturing costs, at EUR 768.4 million, were on a par the prior year despite an increase in production volume. The pronounced increase in sales had a positive influence on gross profit at EUR 162.9 million (+113 percent) and on gross margin of 17.5 percent (2014: 9.1 percent). The sharp rise in gross profit was attributable, on the one hand, to successful cost-cutting measures and, on the other hand, to the weakness of the euro against the US-Dollar.
The ongoing implementation of the cost reduction program, which was launched back in 2010, again had a very positive impact on earnings in 2015. The total savings realized came in at around EUR 45 million.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to EUR 124.0 million and thus 5.4 percent above the prior-year figure (2014 adjusted: EUR 117.7 million). The EBITDA margin was 13.3 percent (2014 adjusted: 13.8 percent).
Other operating income and expenses were largely influenced by foreign exchange effects, especially due to measures to hedge foreign exchange risks. In 2015, these effects added up to expenses of EUR 45.7 million. In 2014, it was an income of EUR 7.3 million. Without this effect, EBITDA for 2015 would have been EUR 169.7 million with an EBITDA margin of 18.2 percent.
Earnings before interest and tax (EBIT) were also positive at EUR 2.7 million (2014 adjusted: minus EUR 31.6 million).
The considerable improvement in EBIT had a positive effect on ROCE (Return on Capital Employed) which advanced from minus 2.1 percent to plus 0.4 percent.
The financial result came to minus EUR 12.2 million (2014: minus EUR 7.7 million) and was dominated by the expense for discounting of pensions.
Income taxes amounted to EUR 10.6 million in 2015.
Siltronic was able to improve net result for the period by 26 percent, from EUR minus 27.0 million in 2014 to EUR minus 20.1 million in 2015.
Earnings per share came to minus EUR 0.50, an improvement of 22 percent compared with the previous year.
Equity of the company stood at EUR 497.3 million mainly due to the IPO in June 2015. This equals an equity ratio of 47.8 percent.
Siltronic invested EUR 75 million in property, plant and equipment and in other non-current intangible assets in 2015. Capital expenditure serves to meet the increasingly complex specifications of customers. One of the measures is, for example, to substitute obsolescent crystal pullers against state-of-the-art ones.
Free cash flow was significantly positive at EUR 37.4 million in 2015, compared to adjusted EUR 86.3 million in 2014. Siltronic financed its capex from the operating cash flow, both in 2015 and in 2014.
Due to the IPO in June 2015 and the free cash flow generated, the Company increased its net financial assets to EUR 155.9 million as of December 31, 2015, compared with net financial debt of EUR 24.5 million as of December 31, 2014.
Comments on Q4 2015
Siltronic's sales were relatively high in the first half of 2015. However, they began to soften in the third quarter as customers scaled back their inventories and uncertainty grew about what would happen in the economy going forward, particularly in China. In the final three months of 2015, sales were impacted by reduced customers' orders, combined with the usual seasonal slowdown, lower average selling prices in US dollars, and changes in the product mix. Positive currency effects were not able to fully compensate for these factors. Sales for the period October to December 2015 therefore amounted to EUR 215.3 million, down by 3.5 percent on the strong corresponding prior-year period (Q4 2014: EUR 223.2 million).
At EUR 23.2 million, EBITDA for the fourth quarter of 2015 was down year on year (Q4 2014: EUR 39.2 million). The EBITDA margin for the period from October to December 2015 was thus 10.8 percent (Q4 2014: 17.6 percent). The main reason for this decrease, besides the lower level of sales, were the currency effects included in other operating income and expenses. In the fourth quarter, these added up to expenses of EUR 10.5 million (Q4 2014: expenses of EUR 0.2 million).
Expectations for the first half of 2016
In view of the macroeconomic forecasts for 2016, slower growth in the smartphone sector, and the current weakness of demand in the computing sector, Siltronic anticipates that business will be moderate in the first two quarters of 2016.
Prices for some product lines with low production capacity utilization came under pressure in the fourth quarter of 2015. Siltronic expects this trend to continue, at least in the first six months of 2016. For products that have high capacity utilization, the Company currently anticipates relatively stable prices. It is not possible to make a prediction on price development for the second half of 2016.
The company expects sales for Q1 2016 to be at approximately the same level as in Q4 2015.
Looking to the second quarter of 2016 and given what customers have said about how they think 2016 will develop, the Company is slightly optimistic that demand will pick up again.
Siltronic outlook for full year 2016
Siltronic believes there will be interesting opportunities, particularly in automotive and industrial applications, and expects further growth in these areas in the medium term.
Siltronic will continue its cost-cutting programs and expects savings of around EUR 30 million to EUR 35 million in 2016. These activities will begin to make an impact in the first half of 2016.
The Company anticipates negative exchange rate effects resulting from currency hedging in 2016 which should predominantly occur in the first quarter. Assuming a US dollar/euro exchange rate of 1.10, these should be in the range of EUR 10 million to EUR 15 million.
For 2016, Siltronic expects a rise in wafer area in the single-digit percentage range and believes that the product mix will be roughly the same as in the previous year. The proportion of 200 mm wafers, which are made from float-zone crystals, is likely to continue to increase.
Sales for 2016 as a whole are expected to be slightly below the level in 2015.
EBITDA margin should slightly rise. In the medium term, the Company seeks to achieve an EBITDA margin target of 20 percent which it does not expect to already achieve in 2016.
Siltronic expects ROCE to be in the mid single-digit percentage range in 2016.
The Company is planning on capital expenditure of around EUR 80 million in 2016, most of which will be spent on state-of-the-art crystal pullers and further automation at the production sites. The new crystal pullers will enable Siltronic to make further improvements to the crystals’ properties, while increased automation will significantly increase productivity.
Free cash flow is anticipated to be well into positive territory in 2016, but below the 2015 figure. This cashflow is impacted due to the fact that the balance of advance payments received from customers is to decline by approximately EUR 20 million.
Siltronic expects earnings per share to be slightly positive in fiscal year 2016.
Conference call for analysts and investors
Siltronic AG’s Executive Mangement will conduct a conference call with analysts and investors (in English only) on March 16, 2016 at 3pm (CET). This call will be streamed via the internet. The audio webcast call will be available live and on-demand on Siltronic’s homepage at http://www.siltronic.com/int/de/investor_relations/reports/2015/annual_report_2015/annual_report_2015.jsp
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).