Siltronic continues its strong business development in Q3 2018

  • Demand for wafers in all diameters remains high

  • Q3 sales were up by 5 percent sequentially

  • EBITDA rose by around 10 percent over the second quarter of 2018

  • EBITDA margin up to 42 percent

  • Clear increase in sales and earnings year-on-year

  • Sales forecast raised slightly

Siltronic AG (MDAX/TecDAX: WAF) was able to confirm the positive development from the first half of the year in the third quarter of 2018. This was driven by the sustained high demand for wafers, which led to a further rise in average selling prices.

“The demand for wafers remained strong in Q3 2018 across all diameters. The resultant increase in average selling prices once again contributed positively to our sales and earnings,” stated Dr. Christoph von Plotho, CEO of Siltronic AG.

Rise in sales driven by higher average selling prices

Sales in Q3 2018 increased to EUR 379.8 million, which represents a rise of 5.1 percent compared to the second quarter of 2018 (EUR 361.3 million). Thanks to the continued high demand for wafers, average selling prices rose further. On the request of a customer shipping was switched from sea to air freight. This resulted in a one-off increase in sales of EUR 8 million in Q3. Exchange rate effects had a slightly positive influence compared to the previous quarter, as the US dollar averaged 1.16 against the euro in Q3 after a rate of 1.19 in the second quarter of 2018.   

Sales were up by 23.3 percent compared to Q3 2017, which saw sales of EUR 308.1 million. This increase was driven by the clear rise in average selling prices, as well as a slightly higher sales volume. Exchange rate effects had no notable influence compared to Q3 2017 as the US dollar averaged 1.17 against the euro during that period and was therefore almost on a par with Q3 2018.

Gross profit rises substantially

Cost of sales fell to EUR 204.8 million in the third quarter, compared to EUR 209.3 million in Q2, despite sales as well as wafer area increased. Gross profit came in at EUR 175.0 million, substantially up on Q2 (EUR 152.0 million). The gross margin rose from 42.1 percent to 46.1 percent.

Compared to EUR 197.8 million in Q3 2017, cost of sales increased by 3.5 percent. As the increase in sales is primarily attributable to price increases, gross profit was up by 58.7 percent compared to Q3 2017 (EUR 110.3 million). The gross margin for the third quarter 2017 totaled 35.8 percent and was therefore exceeded by 10.3 percentage points.

Selling expenses, R&D and administration expenses unchanged

Selling expenses, R&D and general administration expenses totaled EUR 31.8 million in Q3 2018, representing 8.4 percent of sales. This represents a slight decrease compared to Q2, which saw expenses of EUR 32.9 million or 9.1 percent of sales.

This figure also fell slightly compared to the EUR 32.2 million posted in Q3 2017.

Minor impact from currency hedging effects in Q3

Siltronic’s other operating income and expenses are impacted by exchange rate gains and losses, particularly in connection with currency hedging measures. These primarily relate to the US dollar and Japanese yen.

Expense of EUR 1.6 million was incurred in Q3 2018, while in Q2 an income of EUR 4.4 million was reported. Income of EUR 2.5 million was posted in Q3 2017.

EBITDA and EBITDA margin rise considerably

Profitability continued to rise driven by higher average selling prices. EBIT was EUR 138.0 million in Q3 2018, 11.2 percent up on the previous quarter (EUR 124.1 million). The EBIT margin reached 36.3 percent (Q2 2018: 34.4 percent).

EBIT in Q3 2017 was EUR 77.8 million and was therefore exceeded by 77.4 percent. The corresponding EBIT margin came in at 25.2 percent and was also improved on by 11.1 percentage points.

EBITDA of EUR 160.2 million was achieved in Q3 2018 (Q2 2018: EUR 146.0 million). This represents an increase of 9.7 percent. The EBITDA margin totaled 42.2 percent in Q3 2018, compared to 40.4 percent in the previous quarter.

In Q3 2017, EBITDA came in at EUR 106.5 million and was therefore exceeded by 50.4 percent. The corresponding EBITDA margin stood at 34.6 percent.

Result for the period and result per share substantially up

After using up Siltronic AG’s tax losses carried forward, the tax rate rose moderately compared to the previous year.

A profit for the period of EUR 114.6 million was generated in Q3 2018. This represents a rise of 16.9 percent compared to the previous quarter (EUR 98.0 million).

Profit for the period of EUR 66.0 million was posted in Q3 2017. The considerable jump in profit compared to Q3 2018 is attributable to the continuous price increases recorded since the first quarter of 2017 in parallel to slightly falling cost of sales per wafer area.

Earnings per share came in at EUR 3.53 in Q3 2018. In the previous quarter, earnings per share totaled EUR 3.04. Earnings per share stood at EUR 2.12 in Q3 2017, and were therefore exceeded by 66.5 percent.

ROCE increased to 66.8 percent following 62.0 percent in Q2 2018. In Q3 2017, ROCE totaled 43.4 percent. The improvement was driven by the substantial increase in EBIT.

Equity increases further

The EUR 203.8 million increase in equity is primarily attributable to the profit for the period of EUR 294.6 million minus the dividend payout of EUR 75.0 million for the financial year 2017.

Non-current liabilities rose by EUR 180.0 million. Of this amount, EUR 139.4 million is attributable to a rise in customer prepayments.

Interest rates had an immaterial impact on the valuation of pension provisions. As of September 30, 2018, the pension provision in Germany was discounted at an interest rate of 2.04 percent, compared to 2.00 percent as of December 31, 2017. By contrast, the interest rate in the USA rose from 3.45 percent to 4.02 percent. 

Strong net cash flow despite investments in the future

Investments in property, plant and equipment and intangible assets totaled EUR 141.3 million in the first nine months of 2018 and mainly related to the capacity expansions for 2019, the new crystal-pulling hall in Singapore and the further automation of production. Payments for property, plant and equipment and intangible assets totaled EUR 127.0 million.

Cash flow from operating activities includes customer prepayments of EUR 171.5 million. Of this amount, EUR 199.9 million was received in the period from January to September 2018 and EUR 28.4 million was repatriated. Siltronic anticipates further prepayments during the remainder of the financial year.

In Q3, net cash flow rose to EUR 93.0 million (Q2 2018: EUR 67.1 million).

Thanks to the high profit for the period, net cash flow for the first nine months came in at EUR 272.7 million (Q1-Q3 2017: EUR 129.4 million).

Net financial assets top EUR 700 million for the first time

Due to the high cash flow, net financial assets set a new high as of September 30, 2018, coming in at EUR 715.8 million. Roughly half of this amount consists of cash and cash equivalents, while the other half is made up of fixed-term deposits and securities.

Sales forecast for the financial year 2018 raised slightly again

Based on the development to date, Siltronic is looking to the fourth quarter 2018 with confidence and believes that further price increases are possible within this environment. “The demand for wafers remains high and we are continuing to experience positive development in average selling prices. We are therefore raising our forecast for the financial year 2018 slightly and are now anticipating sales of slightly above EUR 1.4 billion,” stated Dr. Christoph von Plotho.

For more information on the overall forecast for the full year 2018, please refer to the Annual Report 2017 as well as the Interim Report 2018.

For the full version of this news release (incl. financial data), please download the PDF version.


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