Aixtron Remained On Track In First Half Of 2020
Strong order growth of 41 percent and rising revenue momentum confirms guidance
Despite the Corona crisis, deposition equipment firm Aixtron SE reports that it has remained on track in the first half of 2020. The company received order volumes of €138.4 million, approximately 41 percent more than in the corresponding prior-year period (€98.3 million); in Q2, Aixtron was able to demonstrate strength with a solid order volume of €69.6 million, also compared to the first quarter of the year (€68.8 million).
The main drivers of the growing customer demand for deposition equipment are the growing markets for GaN and SiC power electronics, lasers for ultra-fast optical data transmission and specialty LEDs for display and disinfection applications. Despite the COVID-19 pandemic, Aixtron's operations have been up and running without interruption due to early measures taken and a stable supply chain.
High order backlog
The equipment manufacturer for the semiconductor industry enters the second half of 2020 with a very strong 42 percent year-on-year increase in the order backlog to €156.6 million (as of June 30, 2020, equipment only); at the end of the first quarter (March 31, 2020), the order backlog was €146.3 million.
Due to the development of order intakes in the previous year, revenues (including service and spare parts) in the first six months of 2020 were, as expected, lower than in the corresponding period of the previous year (€132.0 million) at €97.0 million. Quarter-on-quarter, revenue in Q2 of 2020 again developed much more dynamically and, at €56.0 million, exceeded the figure for the first quarter of the year (€41.0 million) by 37 percent.
Aixtron continued to show strong profitability and return on investment in the period from January to June 2020. Despite regional corona-related lockdowns, first in China and later in Europe and the US, which resulted in some delayed local installations, Aixtron generated a gross margin of 39 percent in the first half of 2020 (H1/2019: 40 percent). The margin dip in the first quarter (36 percent) was compensated by a gross margin of 41 percent in the following three months.
Continued strong R&D activities
The significant increase in revenues and margins between April and June resulted in a significantly improved operating result (EBIT, earnings before interest and taxes) of €3.3 million, compared to an EBIT of €-1.1 million in the first quarter of the year, due to lower revenues. Overall, the deposition equipment provider generated an operating result of €2.2 million in the first six months, compared to €19.1 million in the same period last year.
Aixtron invested €28.6 million in Research and Development (R&D), 13 percent more than in the corresponding six-month period of the previous year. Aixtron's R&D efforts for leading-edge technologies are focused on the development and improvement programs for next-generation MOCVD systems - for all application markets - and the OLED qualification project, where Aixtron has achieved some critical specifications and is working intensively on achieving further specifications. In parallel, the company is starting discussions with the customer on the next steps in the joint OLED program.
Solid financial foundation
As a result of the lower revenues and margins, net result in the first half of the year of €2.5 million did not reach the previous year's level (H1/2019: €15.8 million), but in Q2 net result of €3.3 million was up on the start of the year (Q1/2020: €-0.8 million).
The stable equity ratio of 82 percent at the end of the first half of the year (June 30, 2020) continues to demonstrate Aixtron's financial strength. Free cash flow in the first half of the current fiscal year amounted to €-8.4 million, compared to €-4.8 million in the same period of the previous year, due to the build-up of higher inventory levels in preparation for increasing shipments in the second half of the year.
Based on the solid order backlog and the currently estimated low impact of the COVID-19 pandemic, Aixtrons Executive Board confirms its guidance for the full year 2020, and on the basis of an exchange rate of 1.20 $/€, expects to receive orders and revenues of between €260 million and €300 million. The company aims to achieve a gross margin of approximately 40 percent and an EBIT margin between 10 percent and 15 percent.
"In the second half of the year, our business should grow much more dynamically again. We expect revenues to grow strongly in the third quarter and then again in the final quarter", commented Bernd Schulte, president of Aixtron SE.
Felix Grawert, President of Aixtron SE, adds: "The renewal of our product portfolio is making good progress. With our new products we will be able to better support our customers in their growth in future markets such as 5G mobile network expansion and e-mobility".