Siltronic reports strong sales growth and high profitability in Q2 2021

  • Digitization and economic recovery leading to high growth in wafer area sold

  • Significant increase in sales and earnings q-o-q and y-o-y

  • Very strong net cash flow of EUR 71.2 million

  • Net financial assets of EUR 528.4 million

  • Decision to expand capacity through new leading-edge and cost-efficient 300 mm fab at its site in Singapore

  • Forecast 2021 for capex increased to EUR 400 million and for net cash flow reduced accordingly

Siltronic AG (SDAX/TecDAX: WAF) showed again a strong business development in Q2 2021. In H1, sales and earnings were significantly up compared to previous year. Main driver for the strong demand is the ongoing digitization, a significantly improved economic outlook, a loose monetary policy, and stronger consumer demand due to the easing of the corona pandemic. On July 27, 2021 the Supervisory Board of Siltronic AG approved the construction of a new 300 mm fab at its site in Singapore as proposed by the Executive Board, to support the strong growth of the semiconductor market.

"Demand is increasing in all end markets. This trend is expected to continue and will promote further growth of our company. We support the expansion projects of important customers, which cannot be served with existing capacities by adding a new leading-edge and cost-efficient 300 mm fab in Singapore. We intend to secure the utilization of a large part of the new capacities through long-term agreements with prepayments. Negotiations with customers are progressing well. With this project our central R&D hub in Burghausen, providing technical support for the planned expansion, will be further strengthened", said Dr. Christoph von Plotho, CEO of Siltronic AG.

Business development H1/2021

In Q2 2021, Siltronic achieved sales of EUR 341.1 million, a 7.9 percent increase compared to Q1. This positive development was driven by an increase in wafer area sold.

In H1 2021, the company generated sales of EUR 657.1 million, 5.4 percent above H1 2020. The increase was based on strong growth of wafer area sold, but slowed by the strong euro, which appreciated by 9 percent y-o-y.

Due to the corona safety measures already implemented in 2020 and the disciplined behavior of the Siltronic employees, the company was able to manufacture without interruptions and to fully benefit from high customer demand.

Despite the increase in depreciation, cost per wafer area fell considerably in H1 2021 due to economies of scale and productivity gains. Additionally, successful cost-saving measures have unburdened manufacturing costs, which have also decreased somewhat as a result of exchange rate movements. In H1 2021, cost of sales amounted to EUR 463.3 million, an increase of 6.6 percent compared to H1 2020. In Q2 2021, cost of sales increased by 3.7 percent compared to Q1.

The company achieved a gross profit of EUR 105.2 million in Q2, 18.7 percent above Q1. Gross margin rose from 28.0 percent to 30.8 percent.

EBITDA increased by 17.8 percent to EUR 108.0 million in Q2 2021. The EBITDA margin increased by nearly 3 percentage points from  29.0 percent to 31.7 percent. Comparing H1 2021 to H1 2020, EBITDA was 8.1 percent up. Main driver for the positive development was the increase in wafer area sold. Q-o-q, the effect was even stronger than y-o-y, as wafer area sold again increased significantly and cost of sales increased underproportionaly.

EBIT in Q2 increased by EUR 15.4 million to EUR 69.6 million compared to Q1, an increase of 28.4 percent. In H1 2021, EBIT amounted to EUR 123.8 million (H1 2020: EUR 120.2 million).

In Q2 2021, Siltronic generated a profit for the period of EUR 64.0 million. This represents an increase of 9.6 percent q-o-q. The profit after six months was EUR 122.5 million, an increase of EUR 15.7 million. EUR 105.1 million of this amount is attributable to Siltronic AG shareholders. Earnings per share for H1 2021 were EUR 3.50 compared with EUR 3.12 in H1 2020.

Development of equity, net cash flow and net financial assets

With equity of EUR 1,083.6 million at June 30, 2021, Siltronic AG's equity ratio was 54.0 percent compared with 45.4 percent at December 31, 2020. The EUR 211.8 million increase in equity is due to the H1 profit of EUR 122.5 million less the dividend payment of EUR 60 million and the interest-related decrease in pension obligations of EUR 140.2 million.

In H1 2021, Siltronic invested EUR 89.7 million in property, plant and equipment and intangible assets. These mainly relate to investments in the expansion of epi capacities, capabilities and the expansion of crystal pulling halls to replace older equipment.

In Q2 2021, net cash flow was EUR 43.3 million compared to EUR 27.9 million in Q1 2021. Net cash flow in H1 was EUR 71.2 million (H1 2020: EUR 67.7 million). This includes customer prepayments of EUR 16.2 million in H1 2021.

Despite the dividend payment of EUR 60 million, net financial assets increased by EUR 29.2 million to EUR 528.4 million due to the positive cash flow.

Forecast update

Based on current planning, capex for the new fab in Singapore will be around EUR 2 billion until end of 2024, which will be financed mainly by existing liquidity and free cash flow as well as customer prepayments, debt and ‑ if required ‑ equity measures. Furthermore, it was decided to expand Siltronic's German site in Freiberg, which will increase crystal pulling and epitaxy capacities.

Due to the capacity expansion projects, capex will rise from EUR 250 million to around EUR 400 million in 2021. The Executive Board now expects net cash flow to be slightly positive but significantly below prior year.

Continued positive business performance in H2

The Executive Board is satisfied with the very good business development in H1 2021. The growth drivers for Siltronic's business remain intact and the company expects a sustained increase in demand for wafer area in the medium and long term, albeit with some fluctuations.

"With the decision to invest in a cost-efficient fab, we are setting the course for Siltronic AG's continued successful future. With the new leading-edge production capacities, we will further strengthen our position as one of the technology leaders," says von Plotho.

After regulatory clearances have already been granted in various jurisdictions, GlobalWafers and Siltronic expect the voluntary public tender offer by GlobalWafers to be completed as planned in H2 2021 after receiving the pending approvals.

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 July 28, 2021 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 Q2 interim report and the latest investor presentation are also published on the Siltronic website.

Other dates:

October 26, 2021          Q3 2021 quarterly statement