Siltronic performs well in a difficult market environment
Siltronic AG (MDAX/TecDAX: WAF) performed well in the first quarter of 2020 in a difficult environment. Despite the corona pandemic, operations have not been noticeably impacted to date.
"Our priorities in the first quarter were to ensure the health of our employees and maintain smooth business operations as far as possible," said Dr. Christoph von Plotho, CEO of Siltronic AG. "We have succeeded in doing so, and we would like to thank all those involved, our employees, our health service, our customers and suppliers. The close cooperation of all those involved ensured that we were able to report a good result for the first quarter".
Business Development in Q1 2020
Siltronic generated sales of EUR 300.1 million in Q1 2020, a slight sequential decline versus Q4. The decline in the average selling price (ASP) was almost offset by an increase in wafer area sold in light of higher demand. Exchange rate changes had only a minor impact in the reporting period.
Cost of sales increased due to the higher wafer area produced. The cost of sales per wafer area decreased compared to the previous quarter.
The company achieved a gross profit of EUR 89.3 million. Compared to Q4 2019, it has fallen by EUR 7.6 million. This development is mainly due to a lower ASP. The gross margin decreased from 31.8 percent to 29.8 percent.
EBITDA in Q1 2020 was EUR 84.2 million. This represents a decline of EUR 5.8 million or 6.4 percent compared to the previous quarter. The main reason was a decline in ASP. The EBITDA margin declined from 29.6 percent to 28.1 percent. EBIT declined from EUR 56.7 million to EUR 53.3 million.
Although the new coronavirus did not have any significant impact on EBIT and EBITDA, the decrease in the financial result is due to the declining financial markets until March 31, 2020.
Income tax expense in Q1 2020 was exceptionally low in the Group. In Q4 2019, the tax rate was particularly high due to deferred tax expense, whereas it was particularly low in Q1 2020 due to deferred tax income and tax relief relating to corona. The sharp decline in income taxes contributed to the Q1 profit of EUR 46.0 million, which was slightly above the previous quarter (Q4 2019: EUR 45.4 million). Of this amount, EUR 39.6 million is attributable to Siltronic AG shareholders. Earnings per share rose from EUR 1.21 in Q4 2019 to EUR 1.32 in Q1 2020.
Development of equity, net cash flow and net financial assets>
With equity of EUR 1,031.0 million as of March 31, 2020, Siltronic AG's equity ratio was 52.8 percent compared with 47.8 percent at December 31, 2019. The increase in equity is primarily attributable to the net income for the quarter of EUR 46.0 million and actuarial gains of EUR 88.1 million in the calculation of pension obligations.
The EUR 80.7 million decrease in pension obligations is due to higher interest rates. The interest rate in Germany rose from 1.24 percent at the end of 2019 to 1.92 percent at the end of Q1 2020. This more than compensated the interest rate decrease in the USA from 2.98 percent to 2.88 percent in the same period.
The free cash flow in Q1 2020 shows that Siltronic was able to finance the entire cashflows for capex including intangible assets and the refund of customer prepayments, from operating activities without any problems.
The net cash flow of EUR 40.9 million (Q4 2019: EUR 8.9 million) shows Siltronic's net cash flow after the correction of period shifts due to customer prepayments.
The company had net financial assets of EUR 588.1 million as of March 31, 2020.
Effects of the Corona crisis currently not quantifiable
Although Siltronic held up well in Q1 2020 in a difficult environment, the corona pandemic is likely to weigh on business for the rest of the year. Currently Siltronic hardly experiences any order cancellations by customers. The outlook for Q2 2020 is still good. While end markets such as smartphones, automotive or consumer goods such as televisions are declining, there are positive developments in areas such as servers or home office equipment.
However, as the corona virus has spread strongly and an end is not foreseeable at present, an outlook for the second half of the year is currently not possible.
Siltronic's forecast published on March 9 already covered two possible scenarios based on corona and remains valid.
Virtual Annual General Meeting on June 26, 2020 - unchanged dividend proposal
The company is taking advantage of a new legal regulation for the upcoming Annual General Meeting and will hold a virtual Annual General Meeting without physical shareholder presence on June 26, 2020. The Annual General Meeting will be broadcast live on the Internet for shareholders. Voting rights can be exercised by postal vote or by granting a proxy.
The company is sticking to its dividend policy of distributing around 40 percent of the net profit attributable to shareholders. As planned, a dividend of EUR 3.00 per share will be proposed to the Annual General Meeting.
"For the rest of the year, we will continue to focus on protecting the health of our employees and ensuring the smooth operation of our business," said Dr. Christoph von Plotho, outlining the strategic goals. "With a strong balance sheet and an excellent net financial position, Siltronic is well positioned in this crisis. The semiconductor industry is system-relevant because computing power, sensor capabilities, connectivity and data storage in the medical, information and communication technology sectors help counteract the spread of Covid-19. And the corresponding semiconductor components require our silicon wafers as base material," says von Plotho about Siltronic's role.
Conference call for analysts and investors
The Executive Board of Siltronic AG will hold a conference call with analysts and investors (in English only) on April 28, 2020 at 10:00 am (CEST). This call will be streamed via the Internet. The audio webcast will be available live as well as on demand on Siltronic’s website.
The Q1 interim statement and the latest investor presentation are also published on the Siltronic website.
June 26, 2020 Annual General Meeting (virtual)
July 30, 2020 Interim Report 2020
October 29, 2020 Q3 2020 quarterly statement
This press release is a quarterly Group statement in accordance with Section 53 of the Exchange Rules for the Frankfurt Stock Exchange.