Siltronic looks back on a very successful fiscal year 2017
Siltronic AG, one of the world’s leading manufacturers of hyper pure silicon wafers, performed extremely well in 2017 and has slightly exceeded its revenue target and profit expectations.
According to the preliminary and unaudited figures, sales of EUR 1,177 million were significantly higher year on year (2016: EUR 933.4 million). EBITDA came in at EUR 353 million, up 142 percent in comparison with the previous year (2016: EUR 146.0 million). The EBITDA margin came in at 30 percent (2016: 15.6 percent). The very favorable market environment enabled the company to increase the average selling prices for 200 and 300 mm wafers quite significantly. The ASP (average selling price) in US dollar for 300 mm wafers in the fourth quarter of 2017 was around 30 percent higher than in the same period in 2016.
Preliminary earnings before interest and tax (EBIT) of EUR 236 million were notably higher than in the previous year (2016: EUR 27.0 million).
The ongoing execution of the cost reduction programs introduced back in 2010 also positively impacted the result in 2017. The company saved approximately EUR 15 million for the full year 2017.
In 2017, Siltronic invested EUR 123 million in property, plant and equipment and intangible assets. Increases in wafer prices have reached a level that makes investments in additional production capacity for 300 mm wafers attractive. Siltronic therefore decided in September 2017 to expand its capacity until mid-2019 by 70,000 additional 300 mm wafers per month. The increase will enable the company to keep pace with market growth and maintain its market share. The company plans to invest around EUR 140 million in this expansion. In fiscal year 2017, necessary production equipment was ordered and advance payments of around EUR 30 million were made to suppliers. In addition, automation projects already launched were continued and new crystal pullers were installed.
The preliminary free cash flow of EUR 170 million was clearly positive in 2017 and by far exceeded the prior year figure of EUR 19.0 million, as expected.
As a result, preliminary net financial assets increased to EUR 342 million (2016: EUR 175.0 million).
“We performed extremely well in 2017. Sentiment in the semi-conductor industry remained quite positive. Demand for our wafers exceeded our production capacity. This favorable market environment enabled us to increase the average selling prices for our 200 and 300 mm wafers quite significantly,” said Dr. Christoph von Plotho, Chief Executive Officer of Siltronic AG.
Very strong sales in the fourth quarter of 2017
At around EUR 328 million of sales in Q4 2017, the company continued the very positive performance of the first 9 months of the year. Ongoing full capacity utilization for 200 mm and 300 mm wafers, very high capacity utilization for wafers with a diameter of 150 mm and smaller, and a steady increase in prices contributed to this performance. Business development has been positive since Q4 2016, with sales of EUR 246.3 million.
The company reported preliminary EBITDA of EUR 121 million in Q4 2017 driven by price increases. EBITDA in Q4 2016 stood at EUR 50.5 million. The preliminary EBITDA margin in Q4 2017 was 37 percent (Q4 2016: 20.5 percent).
Positive trend anticipated in 2018
The market research institute IHS Markit currently anticipates that demand for silicon wafers for the semi-conductor industry will grow by 4.5 percent in 2018, with predictions for the segment of Solid State Drives (SSD) that is based on NAND technology as the strongest growth driver. The DRAM market is also showing positive signs. The automotive industry and industrial applications are additional growth drivers.
The demand for Siltronic wafers is holding steady in the first quarter of 2018. The production of 300 mm and 200 mm wafers continues to run at full capacity. Production of wafers with diameters of 150 mm and smaller is also loaded close to maximum.
The company is expecting wafer prices to climb further in 2018, while assuming that such price increases will develop at a slower pace than in the previous quarters.
Considering a EUR/USD exchange rate of 1.25 (2017: 1.13) and a EUR/JPY exchange rate of 135 (2017: 127), the company anticipates negative FX impacts on sales of around EUR 100 million and of around EUR 60 million on EBITDA in 2018.
Siltronic is optimistic that fiscal year 2018 will develop positively overall and estimates sales growth in the lower double-digit percentage range despite the negative FX impacts caused by the strong Euro.
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