AT&S Posts Significant Rise in Revenue, Earnings in First Half of 2017/18

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First half of 2017/18 highlights:

• Very strong demand and utilisation at the capacity limit
• Ramp-up of new technology generation mSAP better and faster than expected
• Further efficiency enhancements at IC substrate plant in Chongqing
• Revenue up 25.7% to EUR 485.7 million
• EBITDA more than doubled to EUR 104.4 million
• Profit for the period positive again at EUR 15.4 Million

In the first six months of the financial year 2017/18, AT&S recorded a very positive revenue and earnings development compared with the same period of the previous year, which also led to an increase in the guidance for the financial year 2017/18 on 9 October 2017.

“After some very challenging quarters, primarily due to the ramp-up of both plants in Chongqing, China, we now see a development in the right direction again,” says CEO Andreas Gerstenmayer. “Several factors are decisive in this context: On the one hand, we not only achieved significantly higher revenue with IC substrates in comparison with the previous year, but also efficiency improvements, even though the price situation is still tense. On the other hand, the introduction of the new technology generation in the core business went faster and better than expected, and the other business segments also developed very positively so that nearly all our plants are working at full capacity. With this development, we have accomplished an important step to return to an adequate company performance again.”

Asset, financial and earnings position

Revenue rose by EUR 99.2 million or 25.7% from EUR 386.5 million to EUR 485.7 million. EBITDA was up EUR 52.3 million or 100.4% from EUR 52.1 million to EUR 104.4 million. The increase is primarily attributable to general efficiency measures and the fact that the technological challenges of the newly introduced technologies in the core business were overcome faster than expected. This development was supported by a positive product mix and – based on the weaker development of the Chinese renminbi against the euro – a favourable currency development for production costs. The EBITDA margin amounted to 21.5%, thus exceeding the prior-year level of 13.5% by 8.0 percentage points. The comparative figures of the previous year were characterised by the ramp-up of the two new plants in Chongqing, which entailed fixed production costs while earnings were still low.

Depreciation and amortisation increased by 16.6% to EUR 67.5 million compared to the same period of the previous year, which was primarily attributable to the new plants in Chongqing. EBIT rose by EUR 42.7 million from

EUR -5.8 million to EUR 36.9 million and improved to a lesser extent than EBITDA due to the increase in depreciation and amortisation. The EBIT margin was at 7.6% (prior-year period: -1.5 %).

Finance costs – net improved significantly from EUR -10.0 million to EUR -5.6 million especially due to positive exchange rate effects (H1 2017/18: EUR 3.1 million, prior-year period: EUR -3.7 million).

Tax expense amounted to EUR 15.9 million in the first six months (prior-year period: tax income of EUR 1.0 million). The increase was attributable to the good results at nearly all sites, on the basis of the discontinuation of the capitalisation of deferred taxes for Chongqing and the discontinuation of the reduced tax rate in Shanghai (which is expected to be regained in 2017).

Despite the increase in tax expense, the profit for the period improved by EUR 30.2 million from a loss of EUR 14.8 million to a profit of EUR 15.4 million, due to a significantly better operating result and improved finance costs – net. As a result, earnings per share rose significantly from EUR -0.38 to EUR 0.40.

Cash and statement of financial position

Cash flow from earnings before changes in working capital amounted to EUR 87.2 million compared with EUR 36.9 million in the previous year. Cash flow from investing activities – investments in plant under construction in Chongqing, technology investments in other locations and investments in financial assets – totalled EUR -95.1 million (prior-year period: EUR -155.1 million).

Despite the positive operating result equity declined by -8.8 % to EUR 492.6 million due to negative currency differences of EUR 59.0 million. The equity ratio amounted to 36.1% (31 March 2017: 37.6%).

Net debt rose by 14.5% to EUR 435.7 million. This expected increase resulted from investing activities and the higher net working capital. The net gearing ratio increased to 88.5% compared with 70.5% at 31 March 2017.

Mobile Devices & Substrates segment with significant revenue growth and improved earnings

The faster ramp-up of the new technology generation mSAP with a very positive demand development, very strong demand also in the other parts of core business and substantially higher revenue from IC substrates led to an increase in revenue by 33.1% to EUR 358.9 million. EBITDA improved by EUR 55.8 million to EUR 80.3 million and is based on general efficiency enhancement measures and higher contribution margins. The EBITDA margin, at 22.4%, clearly exceeded the prior-year level of 9.1%.

Automotive, Industrial, Medical segment with higher revenue and stable earnings development

In the Automotive, Industrial, Medical segment revenue was up 6.0% to EUR 184.8 million based on strong demand in all segments, but especially in the Industrial and Medical business. EBITDA was unchanged compared with the level of the previous year, at EUR 23.0 million. The comparative figures of the previous year included the reversal of a provision of building space unused until then in the amount of EUR 3.3 million. The EBITDA margin, at 12.4%, was 0.8 percentage points down on the previous year due to negative exchange rate effects, higher raw material prices and the non-recurrence of the effect of the reversal of the provision in the previous year. These effects were partially compensated by a better product mix and efficiency enhancement measures.

Outlook for the financial year 2017/18

Provided that the macroeconomic environment and the USD/EUR currency relation remain stable, the Management Board expects an increase in revenue by 20-25% for the financial year 2017/18 (original forecast: 10-16%), an EBITDA margin of 19-22% (original forecast 16-18%) and additional depreciation of roughly EUR 15 million in comparison with the financial year 2016/17 (original forecast: approx. EUR 25 million).