Aixtron profits improve

Revenues, gross profit and operating result up against previous year

Deposition equipment firm Aixtron has announced its financial results for the first half and Q2 2019.

Revenues increased to €132.0 million (+12 percent) compared to previous year; order intake reduced year-on-year to €98.3 million (-36 percent); gross profit of €52.4 million was up compared to previous year (+4 percent); operating expenses went down to €33.5 Million year-on-year (-13 percent; and operating result (EBIT) increased to €19.1 million year-on-year (+59 percent)

Business Development

Revenues, gross profit and operating result (EBIT) increased significantly against the previous year, while operating expenses continued to decline year-on-year. Gross and EBIT margins reached the upper end of the ranges forecasted at the beginning of the year. Profitability thus continued to improve in H1/2019.

As expected, order intake in the first half of 2019 was down year-on-year, especially in the optoelectronics segment. Against the backdrop of the ongoing trade dispute between the USA and China, our customers were reluctant to invest in the expansion of their production capacities. Despite this development, the key figures for the first half of the year are fully in line with the annual guidance.

The market developments of an increasing use of lasers for 3D sensor technology and optical data transmission, a progressive expansion of the 5G network and an increasing use of energy-efficient power electronics remain positive and are only affected for a short time by the current tensions.

The company's Gen2 OLED system was installed in a pilot production line at our customer's facility and is operated jointly by engineers from our customer and our subsidiary APEVA. In the coming months, the joint operation of this system is expected to confirm the efficiency of the OVPD technology. This is another scheduled step towards the qualification of the OVPD technology for this customer.

Bernd Schulte, president of Aixtron SE, comments: "We are pleased with the improved profitability in the first half of 2019, but this also reflects the expected customer reluctance to invest in new production capacity, which was further exacerbated in the short term by the US sanctions against Huawei. We are optimistic that order intake will improve in the second half of the year, in particular due to an expected recovery in demand from Asia. In combination with our strong order backlog, we plan to meet our forecast for the year. Especially in the areas of lasers, power electronics and special LEDs, we continue to see three strong growth drivers that are important building blocks for global megatrends such as the next generation of 5G wireless networks, 3D sensors for mobile phones and power electronics for electromobility and renewable energies, as well as next-generation MicroLED displays."

"Our OLED subsidiary APEVA has reached another important milestone with the successful commissioning of a Gen2 system at our customer's site. The tool is currently undergoing an extensive evaluation program and we are confident that we will make further progress in qualifying the system. In power electronics, we see a steadily rising demand for systems for gallium nitride-based applications, driven among other things by the expansion of 5G mobile communication networks. In addition, we are making great progress in marketing our new silicon carbide production system, for which we have already received initial orders in addition to positive customer feedback," adds Dr. Felix Grawert, President of Aixtron.

Guidance

Based on the good results for the first six months of the fiscal year 2019 and the assessment of the development of demand in the current market environment, Aixtron's management confirms its 2019 full year guidance for sales and orders and now expects improved profitability for 2019 with margins at the upper end of the previously forecast ranges.

Accordingly, the company expects a stable to growing revenue development compared to 2018. For the second half of the year, an increase in demand is expected, particularly from Asia. Based on the good H1/2019 results, the present assessment of the order situation taking into account the current market environment and the budget exchange rate of 1.20 USD/EUR, the company expects to receive orders for the current financial year in a range between €220 million and €260 million.

This forecast includes an expected order from the OLED customer for a next test tool as part of the ongoing qualification process for OVPD technology for the OLED display industry. With revenues in a range between €260 million and €290 million, Aixtron's management expects to achieve a gross margin of around 40 percent (previously: between 35 percent and 40 percent) and an EBIT of around 13 percent (previously: between 8 percent and 13 percent) of revenues in 2019.

Furthermore, the company anticipates a free cash flow between €15 million and €25 million in 2019. Expectations for 2019 fully include the results of Aixtron's APEVA subsidiary, including all necessary investments to continue the development of OLED activities.

Developments in Aixtron's markets are positive. In particular, the increasing use of lasers in 3D sensor technology and optical data transmission, the expansion of the 5G network and the increasing use of energy-efficient power electronics should lead to further growth in the corresponding target markets.