AIXTRON's 5-Point-Program progressing
* Excludes provision revisions and re-categorization of insurance
** Operating CF + Investing CF + Changes in Cash Deposits
In spite of continuously high capacity utilization rates at many LED chip manufacturers there were still no significant new investments in respective production equipment. AIXTRON's order intake showed a slight increase to EUR 35.7m in the third quarter (Q2/2013: EUR 30.5m; Q3/2012: EUR 34.5m). This is also reflected in the Company's revenue development. The Q3/2013 gross profit, even excluding unusual effects, showed a improvement against the same quarter of the previous year and was also up from the previous quarter. A lower revenue percentage of final acceptances was compensated by reduced production costs.
An unusual effect in the gross profit was the EBIT-neutral reclassification of the expected insurance coverage amounting to EUR 15.0m following the fire in a third-party warehouse. In contrast to that, the consequent utilization of components in excess stock, slightly increased forecasts of tools to be sold as well as reduced obligations on purchase agreements with suppliers had a positive effect on gross profit as previously made provisions were reduced.
Mainly as a result of the aforementioned unusual effects and the positive cost effects from its 5-Point-Program the Company's Q3/2013 EBIT at EUR 2.9m was improved against both the previous year and the previous quarter (Q3/2013 Excludes provision revisions and recategorization of insurance: EUR -9.2m; Q3/2012: EUR -78.3m; Q2/2013: EUR -9.8m).The net result for Q3/2013 amounted to a positive EUR 1.6m (Q3/2013 Excludes provision revisions and re-categorization of insurance: EUR -10.6m; Q3/2012: EUR -78.3m; 9M/2013: EUR -86.2m; 9M/2012: EUR -102.2m), representing an improvement against both, the previous year and the previous quarter (Q2/2013: EUR -11.8m).
The free cash flow that was generated until the end of September demonstrates the specific focus on liquidity management. Though free cash flow was negative at EUR -6.5m in the third quarter 2013, especially due to severance payments, the cash outflow for the first nine months amounts to only EUR 0.9m (Q2/2013: EUR -3.7m; Q3/2012: EUR -26.0m).
5-Point-Program
The 5-Point-Program, presented by the CEO in May 2013, is being consistently pursued. In the third quarter, AIXTRON started its "supply chain process", an individual project related to point 3 "processes". Amongst others, the aims of this project are an integrated planning process, to involve suppliers more closely in procurement and product development processes which allows AIXTRON to reduce the inventory risk and improve lead times as well as a better management of a more defined supply chain.
A thorough analysis of AIXTRON's technology fields has fundamentally confirmed the Management's view on targeted future business opportunities, such as Silicon applications, OLEDs and Power Electronics. The Management has also identified other technology fields with attractive market potential. Consequently, R&D expenses and investments are made in defined growth areas.
Management Review
“Though the order situation is still subdued we are using the time to adapt to the new market conditions", says Martin Goetzeler, CEO of AIXTRON SE. "Our customers are currently in the course of optimizing their processes for the production of more powerful and cost efficient devices. We are actively supporting the industry in this development with our newly implemented technical key account structure and our product roadmap. Moreover, we want to reduce both our lead times and the timeframe from the conception of a product to its volume production."
High capacity utilization rates at leading LED manufacturers give reasons to believe that the overcapacity of MOCVD deposition equipment is further diminishing. However, there has still been no significant pick-up in the demand for new AIXTRON equipment even in the third quarter of 2013. As a result, it still remains difficult to give a precise forecast of the Company’s revenues and EBIT margin. However, the Management thinks that Q4/2013 revenues will be higher than in Q3/2013.
