Demand For GaN Is Driving Aixtron Growth
Order intake increases by 90 percent and profits rise in first half of 2021
Aixtron SE has reported a very strong business performance in the first half of 2021, with order intake for the leading provider of deposition equipment to the semiconductor industry reaching €263.3 million in this period, the highest level in the past ten years. Customer orders almost doubled (plus 90 percent) compared with the corresponding prior-year period (€138.4 million).
In the second quarter of 2021, the order volume of €139.0 million exceeded the already strong first quarter of the year (€124.4 million) by a further 12 percent. Customers particularly requested Aixtron equipment for GaN power electronics applications. Optoelectronics applications for optical data transmission as well as LEDs for fine pitch displays were also in high demand.
At the end of the quarter (June 30, 2021) the equipment order backlog reached €295.0 million, the highest volume in the past decade. It was 88 percent higher than in the same period of the previous year (€156.6 million); at the end of the first quarter (March 31, 2021), Aixtron still had an order backlog of €223.5 million.
"Customer demand is very high in all end markets relevant to us. In particular, Aixtron's equipment for the production of GaN power electronics, for the production of components for 5G network expansion and for high-speed optical data transmission is in high demand. This trend is unbroken, and we expect to continue to see very dynamic revenue growth in the second half of the year," said Felix Grawert, president and CEO of Aixtron SE. "The GaN material system in particular opens up competitive advantages for our customers in terms of performance, but also with regard to energy consumption and the associated CO2 emissions. Our customers are increasingly taking advantage of GaN in devices," adds Grawert.
High revenue growth in the second quarter of 2021
Aixtron also strongly increased revenues and profits in the first half of 2021 and significantly improved profitability. At €117.2 million, revenues (including service and spare parts) exceeded the corresponding prior year figure (€97.0 million) by 21 percent. In the second quarter, revenues rose to €67.7 million, 37 percent higher than in the opening quarter of the year (€49.5 million).
61 percent of the revenues in the second quarter of 2021 were generated with systems for optoelectronics. Another high share of sales was contributed by equipment for power electronics (30 percent), in particular systems for gallium nitride applications. 7 percent of the revenues were attributable to the LED area.
At €45.2 million, gross profit in the first half of 2021 exceeded the gross profit of the prior-year period (€37.5 million) by 21 percent. In the second quarter, growth momentum was very high compared to the previous quarter, with gross profit in the second quarter increasing by 61 percent from €17.3 million to €27.9 million compared to the previous quarter. Aixtron achieved a gross margin of 39 percent in the first six months. In the second quarter, the deposition specialist's gross margin was 41 percent, compared to 35 percent in the previous quarter.
Operating expenses rose by 14 percent in the first half of the year from €35.3 million in the previous year to €40.2 million. Operating expenses in the first half of 2021 include the one-time expenses for the realignment of the business activities of the subsidiary APEVA in the amount of €3.2 million. In the second quarter, operating expenses including the one-time expenses for APEVA, amounted to €22.3 million, compared with €18.0 million in the first quarter of this year.
Aixtron was also able to strongly increase its operating result due to the high revenue growth. In the first half of the year, the equipment specialist more than doubled its earnings before interest and taxes (EBIT) from €2.2 million to €4.9 million. After EBIT in the first quarter was still slightly in the red at €-0.7 million, EBIT in the second quarter amounted to €5.6 million. In the first half of 2021, the EBIT margin doubled to 4 percent from 2 percent in the first half of the previous year; in the second quarter it was 8 percent.
In addition, the capitalisation of deferred taxes on loss carry-forwards amounting to €3.4 million in the second quarter of 2021 had a positive impact on net profit which improved significantly to €11.5 million in the first half of the year, compared with €2.5 million in the corresponding prior-year period. In the second quarter, net profit doubled from €3.8 million in the previous quarter to €7.7 million.
Strong financial foundation
Due to the significant increase in customer prepayments reflecting the positive order situation, Aixtron reported a decrease in the equity ratio as of June 30, 2021. It was 73 percent at the end of the first half year (June 30, 2021), compared to 84 percent as of December 31, 2020. Due to the positive business development, Aixtron SE had distributed a dividend to its shareholders for the first time in ten years for fiscal year 2020. Free cash flow increased to €46.1 million in the first half of the year, compared to €-8.4 million in the same period of the previous year, mainly due to high order prepayments.
Raised forecast for order intake
Aixtron expects for fiscal year 2021: order intake in the range of €440 million to €480 million (previously: €420 million to €460 million) ; revenues from €400 million to €440 million ; gross margin of approximately 40 percent of revenues; and an EBIT margin of 20 percent to 22 percent of revenues.
Expectations for 2021 are based on the assumption that the COVID-19 pandemic continues to have no significant impact on the development of the business.