Succesful year for Siltronic in 2015
Siltronic AG, the world's third-largest manufacturer of hyperpure silicon wafers, had another successful year in 2015. Based on preliminary and unaudited figures, sales increased to €931 million in 2015, up 9 percent year on year (2014 adjusted: €853 million). This significant rise was mostly due to a strong US dollar and higher unit sales.
Preliminary earnings before interest, taxes, depreciation, and amortization (EBITDA) of the TecDAX-listed company amounted to €124 million. EBITDA was 5 percent above the prior-year figure (2014 adjusted: €118 million). The preliminary EBITDA margin was 13 percent (2014 adjusted: 14 percent). Other operating income and expenses are largely influenced by foreign exchange effects, especially due to measures to hedge foreign exchange risks. In 2015, these effects added up to expenses of €46 million. In 2014, it was an income of €7 million. Without this effect, preliminary EBITDA for 2015 would have been €170 million with an EBITDA margin of 18 percent.
Preliminary earnings before interest and tax (EBIT) were also positive at €3 million (2014 adjusted: minus €32 million).
Ongoing implementation of the cost reduction program, which was launched back in 2010, again had a very positive impact on earnings in 2015. The total savings realized came in at around €45 million.
Siltronic invested €75 million in property, plant and equipment and in other non-current intangible assets in 2015. The largest items included a new crystal pulling plant at the production facility in Freiberg and new crystal pullers in Singapore.
Preliminary free cash flow was significantly positive at €37 million in 2015, compared to €87 million in 2014. Siltronic financed its capex from the operating cash flow, both in 2015 and in 2014.
Due to the IPO in June 2015 and the free cash flow generated, the Company increased its net financial assets to €156 million as of December 31, 2015, compared with net financial debt of €25 million as of December 31, 2014.
"We are pleased that we can look back on another successful year in 2015. Siltronic continued to grow, despite worldwide economic uncertainties and, in the second half of the year, slightly reduced customer orders," says Dr. Christoph von Plotho, President & Chief Executive Officer of Siltronic AG. "We achieved our October forecast to grow in the high single digits. The EBITDA margin came to 13 percent, which was down slightly on the first three quarters of 2015, as we had expected. EBIT was also positive."
Contraction in Q4 2015, as anticipated
Siltronic's sales were relatively high in the first half of 2015. However, they began to soften in the third quarter as customers scaled back their inventories and uncertainty grew about what would happen in the economy going forward, particularly in China. In the final three months of 2015, sales were impacted by reduced customers' orders, combined with the usual seasonal slowdown, lower average selling prices in US dollars, and changes in the product mix. Positive currency effects were not able to fully compensate for these factors. Preliminary sales for the period October to December 2015 therefore amounted to €215 million, down by approximately 4 percent on the strong corresponding prior-year period (Q4 2014: €223 million).
At €23 million, preliminary EBITDA for the fourth quarter of 2015 was down by 41 percent year on year (Q4 2014: €39 million). The EBITDA margin for the period from October to December 2015 was thus 11 percent (Q4 2014: 18 percent). The main reason for this decrease, besides the lower level of sales, were the currency effects included in other operating income and expenses. In the fourth quarter, these added up to expenses of €10 million (Q4 2014: income of €0.2 million).
Muted expectations for the first half of 2016
In view of the macroeconomic forecasts for 2016, slower growth in the smartphone sector, and the current weakness of demand in the computing sector, Siltronic anticipates that business will be moderate in the first half of 2016. In addition to the usual seasonal weakness of the first quarter, customers will continue to be cautious, which means demand for wafers is predicted to be at roughly the same level as in the fourth quarter of 2015. Looking to the second quarter of 2016 and given what customers have said about how they think 2016 will develop, the Company is slightly optimistic that demand will slowly pick up again. Based on past experience, however, updated forecasts are not likely to be made prior to Chinese New Year in early February.
Siltronic believes there will be interesting opportunities, particularly in automotive and industrial applications, and predicts further growth in these areas in the medium term.
The latest market data on semiconductor component sales does not yet allow any conclusions to be drawn about the course of business during 2016 as a whole.
Prices for some product lines with low production capacity utilization came under pressure in the fourth quarter of 2015. Siltronic expects this trend to continue, at least in the first six months of 2016. For products that have high capacity utilization, the Company currently anticipates relatively stable prices. In the Company's view, it is not yet possible to make a prediction for the second half of this year.
Positive impact from cost-cutting program and reduced losses from currency hedging expected in the first half of 2016
Siltronic will continue with its cost-cutting programs and expects savings of around €30 million to €35 million in 2016. These activities will begin to make an impact in the first half of 2016.
The Company anticipates exchange rate losses resulting from currency hedging in 2016 which should predominantly occur in the first quarter. Assuming a US dollar/euro exchange rate of 1.10, these losses should be in the range of €10 million to €15 million.
| € million | 2015 | 2014 adjusted (2) | Change (%) |
|---|---|---|---|
| Statement of profit and loss | Jan. 1–Dec. 31, 2015 | Jan. 1–Dec. 31, 2014 | |
| Sales | 931 | 853 | 9% |
| EBITDA | 124 | 118 | 5% |
| EBITDA margin | 13% | 14% | |
| EBIT | 3 | -32 | |
| Capital expenditure (3) | 75 | 41 | 83% |
| Cash flow / statement of financial position | Dec. 31, 2015 | Dec. 31, 2014 | |
|---|---|---|---|
| Free cash flow | 37 | 87 | -57% |
| Net financial assets | 156 | -25 |
| € million | Q4 2015 Oct. 1–Dec. 31, 2015 | Q4 2014 Oct. 1–Dec. 31, 2014 | Change (%) |
|---|---|---|---|
| Statement of profit and loss | |||
| Sales | 215 | 223 | -4% |
| EBITDA | 23 | 39 | -41 % |
| EBITDA margin | 11 % | 18 % |
(1) The results in this document are preliminary and have not yet been approved by the Supervisory Board or audited by an external auditor. All numbers have been rounded to the nearest million.
(2) The step acquisition of Siltronic Silicon Wafer Pte. Ltd. (SSW) in Singapore on January 24, 2014 resulted in positive consolidation effects that have been recognized in the adjusted figures for 2014. The numbers were adjusted to what they would have been had SSW been acquired prior to January 1, 2014.
(3) Excl. capital expenditure on financial assets.
Upcoming dates
A comprehensive report with more detailed disclosures will be provided when the final results for 2015 are published on March 16, 2016.
