News Article
Aixtron suffers severely with lack of orders and poor revenues
This was heavily influenced by poor consumer confidence, credit tightness, reduced subsidies and ongoing customer overcapacity. The order intake in the next quarter does not look bright either, so the firm aims to concentrate on R&D investments in the immediate future
Aixtron SE opened fiscal year 2012, as expected, with subdued Q1 revenues of € 42.0 million and a correspondingly negative EBIT of € -18.3 million, reflecting the current trough level market demand.
Despite the difficult market conditions, the company remains focused on delivering further improvements to existing products and services and on accelerating specific strategic R&D investments aimed at developing new products for future market opportunities. For the full year 2012, management reiterated the target of remaining EBIT profitable.
With the considerable reduction in order intake during the second half of 2011, in line with expectations Q1/2012 revenues came in at € 42.0 million for the quarter, 80% down on the € 205.4 million a year before, and 70% lower sequentially (Q4/2011: € 140.1 million). Gross profit decreased by 90% compared to the previous year from € 104.2 million to € 10.3 million and 13% sequentially (Q4/2011: € 11.8 million).
Consequently, and as already predicted by Management in Q4/2011, Q1/2012 finished EBIT negative at € -18.3 million, compared to € 74.9 million in Q1/2011 and € -16.9 million in Q4/2011.
The consolidated net result of the Aixtron Group came in at € -12.3 million for Q1/2012 (Q1/2011: € 52.3 million; Q4/2011: € -10.9 million).
Heavily influenced by fragile consumer confidence, credit tightness, reduced subsidies and ongoing customer overcapacity, the Company’s order intake visibility remains limited. The Q1/2012 order intake of € 31.5 million was sequentially broadly in line with the Q4/2011 level of € 29.3 million (Q1/2011: € 210.3 million) which suggest that the current order levels may represent the trough level of the current cycle.
Despite the current market conditions, Aixtron Management continues to be convinced that the development of a sustainable LED lighting industry will follow this uncertain transitory period. Set against this difficult environment, the Company remains focused on delivering further improvements to existing products and services and on accelerating specific strategic R&D investments focused on developing new products for future market opportunities.
This strong R&D focus is reflected in the 32% year on year increase in R&D costs of € 16.4m in Q1/2012 (Q1/2011: € 12.4m) and the 12% sequential increase compared to the prior quarter(Q4/2011: € 14.6 million), and additionally in the increased average number of 325 R&D employees in Q1/2012 compared to 316 in Q4/2011 and 252 in Q1/2011.
Management Review
Paul Hyland, President & Chief Executive Officer at Aixtron offers the following comment on the current business and market situation, “Times are undoubtedly very tough , but we remain convinced that we have built a strong and resilient foundation to our business, designed to protect the Company in the difficult climate that the whole industry is currently operating in."
"Furthermore, we have significantly enhanced our existing product portfolio over the last 18 months, so that we are confident of being highly competitive in the event of a sudden upturn of demand in the market. Additionally, despite the very volatile current economic environment, we have more than just sustained our MOCVD R&D efforts, we have accelerated our investments into both next generation MOCVD products and other ‘Beyond LED' products that we believe are necessary to support our longer-term ambitions.”
Outlook
Order intake visibility has not improved to the point where Aixtron Management can yet predict a full year revenue figure. Nevertheless, the Company still targets to remain EBIT profitable in 2012 under the current circumstances. On a more positive note; there continues to be solid evidence of emerging new LED lighting product developments, increasingly proactive government engagements and clear company positioning investments.