Reading time ( words)
AT&S records an increase in revenue and a clear plus in earnings in the first nine months compared with the very high level of the previous year and adjusted for the start-up effects in China.
- Continued good demand in all key customer segments
- In the core business, AT&S increased relative profitability
- Revenue 5.3% above the strong prior-year level; third quarter was on record level
- EBITDA adjusted for the start-up effects from Chongqing rose by 8.5% compared with the previous year, the adjusted EBITDA margin was at 26.0%; the non-adjusted figures were still influenced by the start-up effects from Chongqing
Further operational improvements in the ramp-up of the new IC substrate plant in China
Andreas Gerstenmayer, CEO of AT&S, commented: “The repositioning of AT&S from a pure printed circuit board manufacturer to a much broader-based provider of high-end connectivity solutions is continuing. We achieved significant improvements in the operational performance in the new IC substrate plant in China. Both production volume and yield have increased considerably. We are still faced with challenges because the transformation in the semiconductor industry, the customer segment for IC substrates, with the related changes in the product and technology cycles, also has an impact on AT&S. This influences the product mix and the achievable price levels significantly. The upgrade of parts of the Shanghai plant to the next generation of technology for high-end printed circuit boards has considerably progressed, and serial production is scheduled to start in the second half of calendar year 2017. Both technology topics are essential for the future positioning and the success of AT&S. In contrast, the development in the core business is very satisfactory, with very good demand and the usual seasonality.”
Asset, financial and earnings position
AT&S exceeded the very good revenue figures of the previous year in the first nine months. At EUR 615.1 million, revenue was 5.3% higher than in the prior-year period.
Based on the start-up effects of the Chongqing project (EUR 51.6 million), EBITDA decreased by EUR 38.1 million or -27.2% from EUR 140.2 million to EUR 102.1 million in the first nine months. Adjusted for these start-up effects, EBITDA amounted to EUR 153.7 million, up 8.5% on the high prior-year value, based on running cost savings and positive currency effects. The EBITDA margin was at 16.6%, down -7.4 percentage points on the very high prior-year level of 24.0%. Adjusted for the Chongqing project, the margin, at 26.0%, significantly exceeds the high adjusted level of 24.4% in the previous year.
Depreciation of property, plant and equipment and amortisation of intangible assets increased to EUR 90.3 million (prior-year period: EUR 64.2 million) based on the Chongqing project. Consequently, EBIT decreased by EUR 64.3 million from EUR 76.1 million to EUR 11.8 million. Adjusted for the Chongqing project, EBIT amounted to EUR 97.2 million, thus exceeding the adjusted prior-year value by EUR 13.4 million. The EBIT margin was 1.9% (prior-year period: 13.0%). The adjusted margin amounted to 16.4%, and was 1.9 percentage points higher than the adjusted prior-year level of 14.5%.
Finance costs dropped from EUR -2.7 million to EUR -18.6 million, which was among other things due to higher gross interest expenses and negative currency effects. The estimates for feasibility of deferred taxes were adjusted and led to increased tax expenses of total EUR 13.0 million in the first nine months of 2016/17.
The profit for the period decreased by EUR 79.9 million from EUR 60.2 million in the prior-year period to a loss for the period of EUR -19.7 million due to the start-up effects of the Chongqing project and the significantly higher negative financial result. This resulted in a decline in earnings per share from EUR 1.55 in the prior-year period to EUR -0.51.
Cash flow and statement of financial position
Cash flow from operating activities before changes in working capital amounted to EUR 74.5 million vs EUR 123.4 million in the previous year. Cash flow from investing activities – investments in the plants under construction in Chongqing, technology investments in other locations and investments in financial assets – amounted to EUR -108.7 million (prior-year period: EUR -175.7 million).
Equity decreased by 3.9% from EUR 568.9 million to EUR 546.8 million due to the loss for the period and the dividend paid of EUR 14.0 million. The resulting equity ratio, at 38.1%, was -4.2 percentage points lower than the value at 31 March 2016 as expected.
Net debt rose by EUR 188.6 million from EUR 263.2 million at 31 March 2016 to EUR 451.8 million. This expected increase resulted from the high investment activities and the increase in working capital, which cannot be financed from the cash flow from operating result. Consequently, the net gearing ratio, at 82.6% at 31 December 2016, was clearly higher than at 31 March 2016 (46.3%). In total, AT&S has cash and cash equivalents of EUR 166.0 million available or available in the short term to continue financing the start-up phase of the Chongqing projects as well as other necessary investments in the current financial year. In addition, AT&S has EUR 223.8 million of unused credit lines as a financing reserve.