EQS-News: AT&S prepares for the upcoming market recovery despite a challenging environment

EQS-News: AT&S Austria Technologie & Systemtechnik AG / Key word(s):
Quarter Results
AT&S prepares for the upcoming market recovery despite a challenging
environment

01.02.2024 / 07:00 CET/CEST
The issuer is solely responsible for the content of this announcement.

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AT&S prepares for the upcoming market recovery despite a challenging
environment

 

• Revenue declines to € 1,205 million in the first three quarters of
2023/24 (PY: € 1,489 million)
• Adjusted EBITDA margin of 26.6% within the range forecast
• Important milestone: opening of first plant in Kulim, Malaysia
• Getting prepared for market recovery in the second half of 2024
• Guidance confirmed for financial year 2026/27, adjusted for 2023/24

 

Leoben – AT&S operated in a challenging market environment in the first
three quarters of the financial year 2023/24. “After a strong second
quarter, demand in the third quarter was once again relatively weak in
some market segments. The markets for mobile devices and industrial
applications weakened significantly. While notebooks and PCs saw a slight
recovery, the market for servers slowed down further. In this environment,
we continued to push our efficiency programmes, which we intensified a
year ago, to ensure a sustainable optimisation of our company’s cost
structure,” says CEO Andreas Gerstenmayer. “In the second half of 2024, a
general market recovery is expected in our industry. We can consequently
assume that capacity utilisation at our existing plants will improve and
we are prepared for the rebound of the market with the go-live of our
plant in Kulim, which is scheduled for the end of the year. We will
therefore have a good chance to participate in a market recover with our
improved cost structures,” Gerstenmayer comments on the company’s
perspective.

In comparison with the strong prior-year period, consolidated revenue
declined by 19% to € 1,205 million in the first three quarters of the
financial year 2023/24 (PY: € 1,489 million). Adjusted for currency
effects, consolidated revenue fell by 16%. This development was primarily
driven by the fundamental changes in the economic environment. With a less
favourable product mix and higher price pressure, revenue in the
Electronics Solutions segment fell short of the strong figures of the
prior-year period. Due to lower demand resulting from high inventory
levels, in particular for servers, as well as an unfavourable product mix
and increased price pressure, the Microelectronics segment also recorded a
decline.

 

EBITDA decreased by 36% from € 416 million to € 268 million in the first
three quarters. The reduction in earnings is primarily attributable to the
decline in consolidated revenue. In order to counter effects such as price
pressure and inflation, which result from the currently difficult market
situation, AT&S already initiated comprehensive cost optimisation and
efficiency programmes in the past financial year. These programmes already
made a higher contribution in the first three quarters of the financial
year 2023/24 than originally planned. As was the case with revenue, both
segments were unable to match the EBITDA figures of the previous year. In
the Electronics segment, EBITDA decreased by 39% to € 176 million (PY:
€ 289 million) due to lower revenue and a less favourable product mix. In
the Microelectronics segment, EBITDA declined for similar reasons as well
as due to higher start-up costs at the plants in Kulim, Malaysia, and
Leoben, Austria, decreasing by 29% from € 128 million to € 91 million.

Currency fluctuations had a positive influence of € 2 million on earnings.
Adjusted for start-up costs in Kulim, Malaysia, and Leoben, Austria,
EBITDA amounted to € 321 million (PY: € 452 million), which corresponds to
a decrease by 29%.

 The EBITDA margin amounted to 22.2% (EBITDA margin adjusted for start-up
costs: 26.6%), thus falling short of the prior-year level of 28.0% (EBITDA
margin adjusted for start-up costs: 30.4%). The margin was supported by
the cost optimisation and efficiency programmes and once again by the
positive development in the Medical segment – a sector for which AT&S
continues to assess strategic options. Depreciation and amortisation
increased by € 2.0 million to € 205 million (17.0% of revenue) due to
additions to assets and technology upgrades. EBIT fell from € 214 million
to € 63 million. Finance costs – net declined from € 37 million in the
previous year to € -41 million primarily due to a change in currency
effects on cash and cash equivalents. Profit for the period declined from
€ 221 million to € 7 million, leading to a decline in earnings per share,
after interest for hybrid capital, by € 5.49 from € 5.33 to € -0.16.

 

Key figures

Q3 Change   Q1-3 Q1-3 Change
in € million Q3 2023/24 2022/23 in % 2023/24 2022/23 in %
Revenue 391 419 -7%   1,205 1,489 -19%
EBITDA 51 101 -49%   268 416 -36%
EBITDA adjusted^* 71 117 -39%   321 452 -29%
EBITDA margin (in %) 13.1 24.1 –   22.2 28.0 –
EBITDA margin adjusted 18.3 28.0 –   26.6 30.4 –
(in %)^*
EBIT -18 32 –   63 214 -70%
EBIT adjusted^* 2.7 49 -95%   119 251 -53%
EBIT margin (in %) -4.7 7.7 –   5.3 14.3 –
EBIT margin adjusted 0.7 11.7 –   9.8 16.9 –
(in %)^*
Profit for the period -42 -3 –   7 221 -97%
ROCE (in %)^* n.a. n.a. –   3.1 14.5 –
Net CAPEX 182 314 -42%   699 803 -13%
Cash flow from 156 117 +33%   497 483 +3%
operating activities
Earnings per share (in -1.19 -0.20 –   -0.16 5.33 –
€)
Number of employees^** 13,800 15,510 -11%   13,922 15,376 -9%

^* Adjusted for start-up costs

^** Incl. leased personnel, average. As at December 31, 2023: 13,792

The financial position as of December 31, 2023 was still characterised by
investing activities and the associated financing activities. Total assets
increased to € 4,197 million due to additions to assets, up 1% compared to
the balance sheet date March 31, 2023. The equity ratio declined by
3.8 percentage points to 24.0% due to the loss for the period attributable
to shareholders, the high investment volume and negative foreign exchange
effects in other comprehensive income (OCI).

Cash and cash equivalents declined to € 608 million (March 31, 2023:
€ 792 million). In addition, AT&S has unused credit lines of € 623 million
to secure the financing of the future investment programme and short-term
repayments.

 

Opening Ceremony Kulim

On January 24, 2024 the opening ceremony of the Campus in Kulim took
place. AT&S Malaysia will produce cutting-edge IC substrates, which are an
integral part of high-performance data processors for computers,
datacentres and AI infrastructure. AT&S Malaysia will start delivering
high-end IC substrates from plant 1 for high-performance AMD data centre
processors in 2024, and increasing contributions to revenue can be
expected from the beginning of 2025. Plant 2 is wind and water tight and
as soon as an improvement in the market environment becomes foreseeable,
the necessary steps will be initiated to ramp up this plant.

 

Expected market environment

The expectations for AT&S’s segments are currently as follows: In the area
of mobile devices, where overall market conditions are weak, reduced
demand has been, and will remain, a challenge for AT&S. In contrast, the
module printed circuit board business continues to develop positively.

Although the Automotive segment is subject to a growth trend as the
electronic content per vehicle is increasing, the PCB market is under
pressure, among other things due to higher inventory levels along the
supply chain. In the Industrial segment, the market is expected to
stagnate in 2024.

In the markets for IC substrates, demand for notebooks in 2024 is expected
to be slightly higher than in 2023. This should lead to higher demand for
IC substrates since inventories have now normalised. However, it must
generally be noted that the market for notebooks is highly volatile and
subject to significant quarterly fluctuations.

The market for servers is currently still impacted by high inventory
levels. The reduction of inventories is proceeding slowly, as an
increasing share of investments currently is flowing into high-priced
products focusing on artificial intelligence and the volume stagnated.
Inventories should have normalised again in the second half of 2024, which
is expected to boost demand for server products. Due to the anticipated
change in architecture, further changes in the product mix are expected;
likewise, the trend towards technologically higher-end IC substrates is
also expected to continue.

 

Outlook 2023/24

AT&S expects the market environment to remain challenging with continued
price pressure in the fourth quarter of the financial year 2023/24, and
persisting high volatility and low visibility. High inflation and interest
rates, recession risks as well as geopolitical developments continue to
represent additional elements of uncertainty for the end markets. AT&S
considers itself well prepared to overcome these challenges with the
available technologies, its broad range of customers and applications as
well as the successful progress of its efficiency programmes, and to enter
the expected phase of market recovery.

 

Depending on the market development, AT&S will continue to push ahead the
investment projects in Kulim and the expansion of the site in Leoben and
implement technology upgrades at other locations. In view of the highly
volatile environment, the ongoing investment projects will be reviewed at
frequent intervals and adapted to the respective current situation if
required.

The management is planning investments totalling up to € 1.1 billion for
the financial year 2023/24 depending on the market environment and
progress of projects.

On January 19, 2024, the company adjusted its revenue forecast for the
current financial year 2023/24. AT&S now expects to generate annual
revenue of around € 1.6 billion in the financial year 2023/24 (previously:
between € 1.7 and 1.9 billion). The EBITDA margin adjusted for start-up
costs will be in the expected range of 25% to 29%.

 

Outlook 2024/25

To counter the continued high price pressure, AT&S will continue to drive
the previously initiated cost optimisation programmes in the financial
year 2024/25. According to market estimates, demand for IC substrates for
servers should recover in the second half of the year. In addition, IC
substrate production will commence at the new plants in Kulim and Leoben
at the end of 2024 and contribute to increasing revenue from the end of
the financial year. With the start of production at the two plants, AT&S
will continue to further differentiate its customer base for IC
substrates.

As usual, the company will provide a concrete outlook for its financial
indicators as part of the publication of the preliminary annual results on
May 14, 2024.

 

Guidance 2026/27

The progress of the production capacity expansion in Kulim, as well as the
expansion of the site in Leoben is still positive despite the challenging
global economic situation. Therefore, AT&S assumes that revenue of
approximately € 3.5 billion will be generated in the financial year
2026/27 and expects an EBITDA margin in the range from 27% to 32%. The
management monitors the currently tense geopolitical situation very
carefully in order to be able to respond to developments at any time and
to make strategic adaptations.

 

 

AT & S Austria Technologie & Systemtechnik Aktiengesellschaft – Advanced
Technologies & Solutions

AT& S is a leading global manufacturer of high-quality IC substrates and
printed circuit boards as well as a developer of pioneering interconnect
technologies for the core areas of mobile devices, automotive & aerospace,
industrial, medical and high-performance processors for VR and AI
applications. AT&S has a global presence with production sites in Austria
(Leoben, Fehring) and plants in India (Nanjangud), China (Shanghai,
Chongqing) and Korea (Ansan near Seoul). A new high-end production
facility for IC substrates is currently being ramped up in Kulim,
Malaysia. A European competence centre with connected series production
for IC substrate technologies is being built in Leoben. Both sites will
start production in the financial year 2024/25. The company employs more
than 14,000 people. Further information can also be found at
[1] www.ats.net

 

Press contact:

 

Gerald Reischl, Vice President Corporate Communications
Phone: +43 3842 200 4252; Mobile: +43 664 8859 2452; [2]g.reischl@ats.net

 

Contact Investor Relations:

 

Philipp Gebhardt, Director Investor Relations
Phone: +43 3842 200 2274; Mobile: +43 664 7800 2274; [3]p.gebhardt@ats.net

 

AT & S Austria Technologie & Systemtechnik Aktiengesellschaft
Fabriksgasse 13
8700 Leoben / Austria
[4] www.ats.net

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01.02.2024 CET/CEST This Corporate News was distributed by EQS Group AG.
www.eqs.com

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Language: English
Company: AT&S Austria Technologie & Systemtechnik AG
Fabriksgasse 13
8700 Leoben
Austria
Phone: +43 (1) 3842200-0
E-mail: ir@ats.net
Internet: www.ats.net
ISIN: AT0000969985, AT0000A09S02
WKN: 922230
Indices: ATX
Listed: Regulated Unofficial Market in Berlin, Dusseldorf, Frankfurt,
Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange;
Vienna Stock Exchange (Official Market)
EQS News ID: 1827609

 
End of News EQS News Service

1827609  01.02.2024 CET/CEST

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