Siltronic reports slightly better sales than expected in the first quarter of 2016

  • At EUR 220.6 million, sales were up by 2.5 percent on the fourth quarter of 2015 (EUR 215.3 million) but down on the very strong first quarter of 2015 (EUR 238.7 million)

  • EBITDA amounted to EUR 23.6 million (Q4 2015: EUR 23.2 million) and, as expected, continued to be adversely affected by exchange rate effects from currency hedges

  • Sales forecast for 2016 as a whole: year-on-year decrease in the low to medium single-digit percentage range

Siltronic AG, the world’s third-largest manufacturer of hyperpure silicon wafers, showed a sound start into 2016 despite challenging market conditions.

"Sales in the first quarter of 2016 were slightly better than we had anticipated at the start of the year. However, we do not see any growth impetus for the second quarter. We believe that, overall, the first half of this year will be in line with our expectations,” said Dr. Christoph von Plotho, CEO of Siltronic AG.

Sales amounted to EUR 220.6 million in the first three months of 2016 and were thus slightly better than expected. The rise compared with the fourth quarter of 2015 was 2.5 percent. However, sales fell by 7.6 percent compared to what had been an especially successful first quarter last year (Q1 2015: EUR 238.7 million). Siltronic’s business performance had been particularly strong in the first six months of 2015. It weakened in the second half of the year because demand for silicon wafers declined and customers scaled back their inventories. Reduced demand and unfavorable changes to the product mix had already led to lower average selling prices in 2015. These negative price effects have continued into 2016. However, the slight appreciation of the US dollar against the euro had a small positive effect on sales in the first quarter.

Cost of sales amounted to EUR 186.9 million in the period January to March 2016; their decrease was disproportionately large compared with the quantity of silicon wafers sold.

The fall in average selling prices was reflected in gross profit, which came to EUR 33.7 million and was thus higher than in the fourth quarter of 2015 (EUR 31.6 million) but lower than in the corresponding period of last year (Q1 2015: EUR 39.6 million). The gross margin was 15.3 percent in the quarter under review, compared with 14.7 percent in the fourth quarter of 2015 and 16.6 percent in the first quarter of 2015.

Other operating income and expense have continued to be influenced by exchange rate gains and losses in 2016, particularly in connection with foreign currency hedging. As expected, they amounted to a net expense of EUR 9.7 million in the first quarter of 2016, compared with a net expense of EUR 10.5 million in the fourth quarter of 2015 and of EUR 2.1 million in the first quarter of 2015.

The reduction in gross profit and the exchange rate effects impacted both on earnings before interest and tax (EBIT) and on earnings before interest, taxes, and depreciation/amortization (EBITDA).

EBITDA amounted to EUR 23.6 million, which was on a par with the previous quarter (Q4 2015: EUR 23.2 million). In the first three months of last year, EBITDA had been EUR 40.1 million. The EBITDA margin reached 10.7 percent and was thus at the same level as in the fourth quarter of 2015.

Without the effects from currency hedging, EBITDA for the first quarter of 2016 would have been EUR 33.3 million with an EBITDA margin of 15.1 percent.

At EUR –5.6 million, EBIT was down by EUR 13.9 million on the first quarter of 2015. However, it increased by 8.2 percent compared with the fourth quarter of 2015 (Q4 2015: EUR –6.1 million).

The decrease in EBIT also had an impact on ROCE (return on capital employed), which came to -3.0 percent in the first quarter of this year. ROCE had been -3.3 percent in the fourth quarter of last year and +4.2 percent in the first quarter of 2015.

The financial result was adversely affected, in particular, by interest-rate effects on currency hedges, and totaled EUR –3.8 million (Q1 2015: EUR –2.1 million). The change compared with the first quarter of 2015 was also attributable to the unwinding of the discount on pension provisions. In the fourth quarter of 2015, the financial result was EUR -3.8 million.

Income taxes amounted to EUR 2.1 million in the first quarter of 2016, equating to a sharp year-on-year fall (Q1 2015: EUR 4.3 million).

The net result for the period came to a net loss of EUR 11.5 million in the first quarter of 2016, compared with a net loss for the period of EUR 8.8 million in the fourth quarter of 2015 and a net profit for the period of EUR 1.9 million in the first quarter of 2015.

Earnings per share came to a loss per share of EUR 0.34.

Lower discount rates on pension provisions impacted on the Company’s equity in the first quarter, which stood at EUR 418.2 million as of March 31, 2016. This gives an equity ratio of 40.6 percent, compared with 47.8 percent as of December 31, 2015.

In the first quarter of 2016, Siltronic invested EUR 20.4 million in property, plant and equipment and in intangible assets. Capital expenditure helps to meet the increasingly complex specifications of customers and to boost efficiency in production. Projects in this area, which had already begun in 2015, included the replacement of outdated with cutting-edge crystal-pullers and the further automation of production.

Non-current liabilities had risen to EUR 473.9 million as of March 31, 2016 (December 31, 2015: EUR 396.0 million). The main reason was the discount-rate-related rise in pension provisions following a decrease in discount rates in both Germany and the United States.

Free cash flow was negative at EUR –6.7 million in the first quarter of 2016. It had been negative at EUR –10.5 million in the fourth quarter of 2015 and positive at EUR 39.6 million in the first quarter of 2015. The free cash flow in the first quarter of 2016 was impacted by cash payments of EUR 33.5 million for capital expenditure on property, plant and equipment, which were significantly higher than the cash payments of EUR 8.1 million made in the first quarter of 2015. The cash payments in the fourth quarter of last year had totaled EUR 18.5 million.

Because free cash flow was in negative territory, net financial assets declined from EUR 155.9 million as of December 31, 2015 to EUR 149.2 million as of March 31, 2016.

Refinement of sales forecast for 2016
Based on publications from market research institutions in the semiconductor industry and on statements from customers about their expectations for business in the rest of 2016, Siltronic currently predicts unit sales of wafers to be at the same level as in 2015. In its March forecast, the Company had anticipated growth in unit sales in the low single-digit percentage range.

Prices for some product lines with low utilization rates had already come under pressure in the fourth quarter of 2015. This trend could also be observed in the first quarter of 2016.

In the first three months of 2016, the Company reported sales that were slightly higher than it had anticipated and Siltronic currently does not see any signs of demand picking up in the second quarter of 2016. However, Siltronic believes that, overall, the first half of 2016 will be in line with expectations.

Based on the current assumptions about the volume of unit sales and the average selling prices, the Company has refined its sales forecast for 2016 as a whole, predicting a decrease in sales compared with 2015 that is likely to be in the low to medium single-digit percentage range.

The company still expects EBITDA margin for the full year 2016 to slightly improve compared to 2015.

“We expect market conditions and the competitive situation to remain challenging in 2016. Siltronic is very well positioned. By investing in the renewal of crystal-pullers and in further automation, we are ensuring that we will continue to be competitive going forward. We have a very solid financial base. Ongoing efforts to reduce our costs and increase our profitability are helping to boost our profitability,” added von Plotho.


SILTRONIC AG – OVERVIEW OF FINANCIAL FIGURES

  Q1 2016 Q4 2015 Q1 2015
Sales 220.6 215.3 238.7
EBITDA 23.6 23.2 40.1
EBITDA margin 10.7% 10.8% 16.8%
EBIT -5.6 -6.1 8.3
EBIT margin -2.5% -2.8% 3.5%
Financial result -3.8 -3.8 -2.1
Net result for the period -11.5 -8.8 1.9
Earnings/loss(-) per share -0.34 -0.25 0.13
Capital expenditure in property, plant and equipment and intangible assets 20.4 34.4 4.3
Free cash flow -6.7 -10.5 39.6
Equity 418.2 497.3 197.5
Equity ratio 40.6% 47.8% 17.9%
Net financial assets 149.2 155.9 16.1
Total assets 1,030.7 1,040.8 1,103.5
Employees 3,882 3,894 4,101

 

Conference call for analysts and investors

Siltronic AG’s Executive Mangement will conduct a conference call with analysts and investors (in English only) on April 28, 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

The investor presentation (in English only), the Interim Statement, the press release and an Excel-file with the most important key figures are also published on the Siltronic homepage.

Upcoming events

May 12, 2016 Ordinary Annual Shareholder Meeting

July 28, 2016 Interim Report Q2 2016

October 27, 2016 Interim Statement Q3 2016


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