Aixtron reports tough H1/2016 in line with expectations
Deposition equipment company Aixtron has announced financial results for the first half and Q2 2016, along with a published opinion recommending a takeover offer by Chinese firm Grand Chip Investment.
Although total order intake in H1/2016 decreased by 6 percent to €95.5m (H1/2015: €101.4m) year-on-year, it improved by 15 percent sequentially (Q2/2016: €51.1m; Q1/2016: €44.4m).
Equipment order backlog in the first half 2016 was slightly down against the previous year at €86.2m, but increased by 27 percent compared to March 31, 2016 (H1/2015: €91.2m; Q2/2016: €86.2m; Q1/2016: €67.7m).
H1/2016 total revenues decreased to €55.5m (H1/2015: €80.7m) while revenues in Q2/2016 improved against the previous quarter (Q2/2016: €34.1m; Q1/2016: €21.4m).
"Despite the weak development of revenues in the first half, we reiterated our 2016 full year revenue guidance due to a solid order momentum which is set to continue into Q3/2016. Before transaction related impacts, 2016 results and free cash flow are expected to improve slightly compared to 2015 but to remain negative as revenue volumes still remain too low to enable full financing of all products in the development pipeline", explains Martin Goetzeler, president and CEO of Aixtron SE.
"In our joint reasoned opinion which was also published today, the Executive Board and Supervisory Board after thoughtful consideration recommend that our shareholders accept the takeover offer from Grand Chip Investment. Compared to alternative scenarios which may either be very risky or would result in a smaller, potentially restructured Aixtron with reduced total growth opportunities, we believe that the transaction is the right step for all our stakeholders. Our works councils agree with this assessment and have issued their own statement also supporting the takeover offer."
Business Development
The development of revenues and earnings was in line with expectations while manufacturers remain cautious concerning capacity expansion. The development in revenues and order intake in Q2/2016 was mainly driven by demand for production systems for opto and power electronics as well as for the silicon industry.
As described above, H1/2016 revenues at €55.5m were down by 31 percent year-on-year (H1/2015: €80.7m). This reflects lower demand from GaN LED- and silicon applications, particularly in Q1/2016. Compared to the previous quarter, revenues in Q2/2016 increased to €34.1m (Q1/2016: €21.4m).
The year-on-year decrease of cost of sales to €45.5m in H1/2016 were mainly attributable to lower volume in H1/2016 and higher qualification costs for the AIX R6 in H1/2015. Against the previous quarter, cost of sales were lower relative to revenues at €27.2m (Q1/2016: €18.3m).
Due to an improved gross margin (H1/2016: 18 percent; H1/2015: 15 percent; Q2/2016: 20 percent; Q1/2016: 15 percent) despite lower revenues year-on-year, gross profit was €10.0m (H1/2015: €12.4m; Q2/2016: €6.9m; Q1/2016: €3.1m).
Operating expenses in H1/2016 of €35.9m were 8 percent lower year-on-year compared to €39.1m in H1/2015. The additional costs from PlasmaSi and the comparative negative currency effect in Q1/2016 were offset by higher productivity, better cost control and a contractual settlement. In a quarterly sequential comparison, operating costs were stable at €18.0m compared to €17.8m in Q1/2016 despite increased revenues in the same period.
Guidance
Despite the fact that the first half 2016 revenues were 31 percent weaker compared to the first six months of 2015, management expects stronger revenues in the second half of 2016 compared to the first half. Total order intake in Q2/2016 as well as equipment backlog were up compared to the previous quarter, supporting Management's expectation of significant revenue growth for the second half of 2016. Consequently, Management reiterates the full year 2016 revenue guidance given in February 2016.
Based on the assessment of Aixtron's current order situation, including current risks and opportunities as well as on the internal budget rate of $/€1.10, Management expects to achieve for fiscal year 2016 revenues between €170 and 200 million. Total 2016 order intake is expected to be between €180 and 200 million.
Based on the internal budget rate of $/€1.10 and depending on the successful completion of qualification processes, market entry efforts as well as the achievement of revenues at the high end of the guidance range, management expects to achieve another improvement of results in 2016. Before transaction related impacts, EBITDA, EBIT, net result and free cash flow are expected to improve slightly compared to 2015 but to remain negative for the full year 2016.
