AT&S Continues Strong Growth Course in Q1-Q3 21/22

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AT&S reports a very positive revenue development in the first three quarters of 2021/22.

“Once again, we were able to significantly increase our revenue and earnings in a challenging market environment, with quarterly records for both figures,” says CEO Andreas Gerstenmayer. “Since the ramp-up of our new plant in Chongqing, China, is progressing faster than expected, we can increase our revenue guidance for the current financial year to 28 to 30%. This once again confirms our growth strategy and therefore also reinforces our revenue projection of approximately € 3.5 billion in the financial year 2025/26,” Gerstenmayer comments on the further development.

Consolidated revenue increased by 30% to € 1,147 million in the first three quarters of 2021/22 (PY: € 884 million). Adjusted for currency effects, the increase in consolidated revenue even amounted to 32%. This growth was primarily driven by the additional capacity in Chongqing for ABF substrates. The broader application portfolio for mobile devices as well as module printed circuit boards also contributed to revenue growth. In the AIM business unit, all three segments supported the growth trend, with the Industrial segment recording the biggest increase. Despite the shortage of semiconductors, revenue in the Automotive segment also grew, though not as dynamically as would be possible without this limitation.

EBITDA rose by 30% from € 187 million to € 244 million. While the increase in revenue had a positive impact on earnings, the start-up costs in Chongqing and Kulim as well as higher material, transport and energy costs had a negative effect on earnings. In order to live up to its role as an innovation driver going forward, AT&S continued to increase its research and development expenses significantly. Currency fluctuations of the US dollar and the Chinese renminbi had a negative impact of € 30 million on the earnings development; without these fluctuations, the growth rate would have been 47%.

Adjusted for the start-up costs, EBITDA amounted to € 262 million (PY: € 192 million), which is equivalent to an increase by 37%. Not including start-up costs and currency fluctuations, earnings would have increased by 53%.

The EBITDA margin amounted to 21.3% (EBITDA margin adjusted for start-up costs: 22.9%), falling short of the prior-year level of 21.1% (EBITDA margin adjusted for start-up costs: 21.7%). Depreciation and amortisation rose by € 40 million to € 161 million due to additions to assets and technology upgrades. Nevertheless, EBIT was up from € 66 million to € 83 million. The EBIT margin amounted to 7.2% (PY: 7.4%). Finance costs – net improved from € -20 million in the previous year to currently € -11 million, mainly due to a change in currency effects. Profit for the period rose from € 37 million to € 62 million, leading to an 81% increase in earnings per share from € 0.79 € to € 1.42.

The financial position was characterised by an increase in non-current assets at the end of the reporting period. Total assets rose to € 3,016 million, up 26% compared with March 31, 2021 as a result of additions to assets and technology upgrades. The significant increase in total assets led to a decline in the equity ratio by 2.0 percentage points despite a 19% increase in equity. The equity ratio amounted to 31.6% at December 31, 2021, thus exceeding 30% despite the large-scale investment programme.

Cash and cash equivalents increased to € 644 million (March 31, 2021: € 553 million). In addition, AT&S has financial assets and unused credit lines of € 336 million at its disposal to secure the financing of the future investment programme and short-term repayments.

Hybrid bond

In January AT&S very successfully completed the issue of a hybrid bond of € 350 million, its largest financial market transaction since the IPO. The holders of the 2017 hybrid bond were invited to exchange their bond for this new bond. 76% of the investors accepted this offer.

Outlook 2021/22

AT&S will concentrate on the start-up of the new production capacities at plant III in Chongqing, continue to push ahead the investment project in Kulim, Malaysia, and the expansion of the site in Leoben, Austria, and implement technology upgrades at other locations in the current year.

The expectations for AT&S’s segments are currently as follows: the persisting strong demand for IC substrates also offers significant growth opportunities in the medium term. The 5G mobile communication standard will continue to drive growth in the area of Mobile Devices. A positive development is expected in the Automotive segment despite the semiconductor shortage. Driven by the roll-out of the 5G infrastructure, the Industrial segment will continue to see a positive development in the coming year. In the Medical segment, AT&S expects a positive development for the current financial year.

The company still plans to invest up to € 700 million in new capacities and technologies in the current financial year.

Due to the faster ramp-up and further efficiency enhancements at plant III in Chongqing as well generally strong demand in the fourth quarter, AT&S has raised the forecast for the development of revenue and now expects revenue growth of 28 to 30% (previously: 21 to 23%). The adjusted EBITDA margin is still expected to range between 21 and 23%, not including approximately € 25 to 35 million (previously: approximately € 50 million) for the start-up of the new production capacity in Chongqing and in Kulim. The outlook is based on the assumption that no unexpected effects such as supply shortages, material and energy price fluctuations occur.

Outlook 2025/26

The progress of the production capacity expansion in Chongqing, China, and in Kulim, Malaysia, as well as the expansion of the site in Leoben, Austria, is still satisfactory despite the challenging global economic and health situation. Therefore, AT&S assumes that revenue of € 3.5 billion will be generated in the financial year 2025/26 and expects an EBITDA margin in the range from 27 to 32%.