Strong start into 2017 for Siltronic

  • Demand for 300mm and 200mm wafers continues to be very strong

  • Significant sales growth of 17 percent

  • EBITDA in the first quarter more than doubled year-on-year

  • EBITDA margin of 20.5 percent (Q1 2016: 10.7 percent)

  • Forecast adjusted slightly upward

Siltronic AG (TecDAX: WAF) has made a strong start into 2017.

Capacity in the Company's 300mm and 200mm wafer production has been fully loaded since the third quarter of 2016. Demand for wafers with a diameter of less than 200mm has also increased, with the result that capacity utilization is very high in this area too.

“As expected, the first quarter of 2017 was strong. Demand for wafers continues to exceed supply and we are seeing higher prices for 300mm wafers as a result. Prices for 200mm wafers are also moving upward, but not at the same rate as for 300mm wafers. Average selling prices have increased significantly in the first quarter,” said Dr. Christoph von Plotho, CEO of Siltronic AG.

Siltronic's sales of EUR 258.0 million for Q1 2017 were 17 percent above Q1 2016 (EUR 220.6 million). Higher average selling prices, an increase in wafer area sold and the favorable exchange rate of the euro against the US dollar have contributed to the strong sales increase.

The 6 percent increase in manufacturing costs to EUR 198.6 million (Q1 2016: EUR 186.9 million) is mainly due to the rise in unit sales. However, manufacturing costs per wafer area were down, due to the successful cost reduction programs.

Gross profit was EUR 59.4 million and thus 76 percent above Q1 2016. The gross margin rose from 15.3 percent to 23.0 percent.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to EUR 53.0 million and thus more than doubled compared to Q1 2016 (EUR 23.6 million). The EBITDA margin reached 20.5 percent (Q1 2016: 10.7 percent).

In the first quarter of 2017 the net expense arising from currency hedging was, at EUR 4.5 million, significantly lower than the figure of EUR 9.7 million reported for the first quarter of 2016. Apart from the negotiated price increases, the successful cost reductions and the higher wafer area sold this also had a positive impact on EBITDA.

Earnings before interest and tax (EBIT) of EUR 23.4 million were significantly higher than in Q1 2016 (EUR -5.6 million).

Profit for the first quarter of 2017 amounted to EUR 17.0 million and is the result of price increases, the higher wafer area sold, and the pleasing decrease in manufacturing costs per wafer area. In the first quarter of 2016, there had been a net loss of EUR 11.5 million.

Earnings per share amounted to EUR 0.56 in the first quarter of 2017 (Q1 2016: EUR -0.34).

The clear improvement in EBIT also had a positive impact on ROCE (return on capital employed), which rose from -3.0 percent in Q1 2016 to 12.9 percent in the first quarter of this year.

In the first quarter of 2017, Siltronic invested EUR 19.3 million in property, plant and equipment and in intangible assets. This related mainly to new crystal pullers at the Freiberg production site and the ongoing automation program, primarily at the plants in Germany.

Cash flow from operating activities includes prepayments that the Company received from customers in the first quarter of 2017. Agreements have been made with the customers that further prepayments will follow in the subsequent quarters of 2017, with total prepayments amounting to around USD 20 million in this fiscal year. These will be invested in production equipment to produce leading-edge technology for which there is an increasing demand. This will improve Siltronic’s product mix but not the company’s overall capacity.

Free cash flow was EUR 31.3 million, due to the strong net profit for the period.

Net financial assets rose to EUR 209.1 million.

Siltronic has revised its forecast for 2017 slightly upward and is now expecting sales of at least EUR 1.06 billion and an EBITDA margin of at least 23 percent

“As announced in 2016, from the first quarter of 2017 we have begun increasing wafer prices in customer contracts that were due for renegotiation. We have negotiated further price increases for the second quarter and expect that prices will continue their upward trend in the third quarter. The wafer market is finally seeing the long awaited price corrections,” explained von Plotho.

The effects of the price increases will sequentially filter through into the sales figures of Siltronic AG in 2017, as the way the contracts are structured means that customer contracts will be renegotiated at different times over the course of the year.

“Although in some cases the average selling prices of 300mm wafers have increased significantly in the first quarter, they are still not at a level that would make an expansion of production capacity commercially viable,” added von Plotho.

As usual, costs were higher in the first quarter than in the fourth quarter. Siltronic expects margins to further improve over the course of the year.

Siltronic has revised its forecast for 2017 slightly upward and is now expecting sales of at least EUR 1.06 billion and an EBITDA margin of at least 23 percent. ROCE will be significantly above WACC. The tax rate is now expected to be 20 percent or slightly lower.

Due to the high demand and the tight supply situation it is Siltronic’s priority to maximize output within the existing production. The company therefore currently expects to achieve cost savings of EUR 15 million to EUR 20 million in 2017.


SILTRONIC AG – OVERVIEW OF FINANCIAL FIGURES

Statement of profit or loss / Cash flow in EUR million Q1 2017 Q1 2016
Sales 258.0 220.6
EBITDA 53.0 23.6
EBITDA margin 20.5% 10.7%
EBIT 23.4 -5.6
EBIT margin 9.1% -2.5%
Net result for the period 17.0 -11.5
Earnings/loss(-) per share 0.56 -0.34
ROCE 12.9% -3.0%
Capital expenditure in property, plant and equipment and intangible assets 19.3 20.4
Free cash flow 31.3 -6.7
Statement of financial position in EUR million March 31, 2017 December 31, 2016
Equity 475.1 425.3
Equity ratio 43.3% 40.2%
Net financial assets 209.1 175.0
Total assets 1,097.2 1,056.8
Employees 3,728 3,757

 

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 27, 2017 at 3pm (CEST). This call will be streamed via the internet. The audio webcast call will be available live and ondemand on Siltronic’s homepage.

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

Upcoming events

May 9, 2017 Annual General Meeting, Munich

July 28, 2017 Interim Report Q2 2017

October 28, 2017 Interim Reporting Q3 2017


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