2011 revenues of the semiconductor deposition equipment maker also declined 22% over 2010

Despite poor market conditions in the second half of 2011 Aixtron SE had revenues of € 611.0 million of revenues and a 18% EBIT margin for 2011.

 

 

 

Although 2012 is expected to be a transitional year between two LED investment cycles with potentially lower revenues, the firm's management anticipates that the Company will remain EBIT profitable for the year.

 

 

 

Total order intake for Aixtron in 2011 was € 513.4 million, 31% down compared to 2010 (€748.3 million) with order intake dramatically slowing down in the second half of the year. The year end order backlog stood at € 141.0 million on December 31, 2011, 49% lower than at the same time in 2010 (December 31, 2010: € 274.8 million).

For the full year 2011, Aixtron recorded revenues of € 611.0 million. While representing a decrease of € 172.8 million, or 22%, compared to € 783.8 million in 2010, 2011 still turned out to be Aixtron’s second best year in terms of revenues.

Following an assessment of the market outlook for Aixtron’s specific industry and the company’s currently limited visibility, Management concluded the likelihood of a continuation of the low level market activity seen towards the end of 2011 into the first half of 2012. In view of this and the consequent likely reduction in inventory turnover, combined with the timing of new product developments in the pipeline, Management decided to make a provision against the potential risk of unsold excess inventories of approximately € 40 million, resulting in a reduced year end total inventory figure of € 184.6 million.

However, Aixtron was able to quickly adapt to the deteriorating business environment during the second half of the year, and consequently still delivered reasonable profit margins for the year, with a gross margin of 38% (2010: 53%) and an EBIT margin of 18% (2010: 35%). Seven percentage points of the gross margin decline as well as of the EBIT-Margin decline were attributable to the inventory provision mentioned above.

The 2011 net profit was € 79.5 million (13% of revenues), 59% down from the € 192.5 million (25% of revenues) in 2010 resulting in basic earnings per share of € 0.79 (2010: € 1.93).

Dividend proposal

Aixtron’s Executive and Supervisory Boards will propose to the shareholders’ meeting in May 2012 that a dividend of € 25.4 million or € 0.25 per share (€ 60.7 million or € 0.60 in 2010) will be distributed for the fiscal year 2011. This would result in a pay-out ratio of 32% based on the group net income (2010: 32%), leaving the previous dividend policy unchanged.

Management Review

Despite the current market conditions, Aixtron Management remains convinced that the development of a sustainable LED lighting industry will follow this temporary period of uncertainty.

Paul Hyland, President & Chief Executive Officer at Aixtron, comments, “However we look at 2011, it was certainly an extraordinary year by any standard. We were still delivering strong revenues in the first half of the year, whereas in the second half, the market environment changed dramatically, resulting in a abrupt reduction in demand for MOCVD systems. We have made the necessary adjustments to our order book and inventory and executed immediate cost saving measures, including headcount reductions, without jeopardising our ability to quickly respond to an uptick of demand or diluting our R&D focus.”

Commenting on the quality of Aixtron’s ability to cope with such volatility and to remain a leading player in the industry, Hyland continues, “Our 2011 full year result still underlines the benefit of the Company's flexible business model and stable financial position which has enabled us to effectively cope with these severe market fluctuations, whilst maintaining our commitment to strategic investments in research and development. Our substantial multi-year investment program is not exclusively limited to the development of next generation LED manufacturing tools. We are also focusing on the development of new technologies for other end markets we believe we can address with the expertise that we have within Aixtron.”

In summary, Hyland says, “In the short term, we believe that the next substantial investment cycle will be triggered by MOCVD demand from the emerging LED lighting market. We continue to see very encouraging signals in the form of increasingly proactive governmental engagement and clear market preparation and positioning activities from significant industry players, specifically targeting the LED lighting opportunity. The mid- to long-term prospects for the LED industry remain excellent, particularly in view of the increasing worldwide acceptance of the environmental and cost benefits that come with using LED technology for general lighting applications.”

Outlook

With currently very limited order visibility, it is far more difficult than in previous years to provide a full year guidance. However, Management believes that 2012 looks set to be a transitional year between LED investment cycles with potentially lower revenues. Consequently, although unable to offer a precise revenue and EBIT margin guidance at this point in time, Management anticipates remaining EBIT profitable in 2012. Aixtron Management will present a full year revenue and EBIT forecast as and when visibility improves.

Aixtron will host a financial analyst and investor conference call on Thursday, March 1, 2012, 3:00 p.m. CET (6:00 a.m. PST, 9:00 a.m. EST) to review the full year 2011 results. From 2:45 p.m. CET (5:45 a.m. PST, 8:45 a.m. EST) one can dial in to the call at +49 (69) 247501–899 or +1 (212) 444–0297.

A conference call audio replay or a transcript of the conference call will be available at http://www.aixtron.com, section “Investors, Reports/Presentations”, following the conference call.