AT & S Austria Technologie und Systemtechnik Aktiengesellschaft

EANS-News: AT & S Austria Technologie und Systemtechnik Aktiengesellschaft / AT&S presents preliminary results of the financial year 2016/17: Growth course continued, earnings negatively influenced by start-up of the new plants in China (with document)

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annual result

* Dynamic growth continues: revenue up 6.8%, thus outperforming the market
* Highly profitable core business with an EBITDA margin of 25.4%-despite price
  pressure and temporarily lower capacities
* EBITDA negatively influenced by Chongqing start-up effects and price pressure
  on IC substrates
* Outlook 2017/18: stronger revenue growth than in 2016/17, profitability still
  influenced by start-up effects and market developments

 
For AT&S, a global technology leader for high-end printed circuit boards, the
financial year 2016/17 was a year with a very positive revenue development. At
the bottom line, however, the year was characterised by the longer start-up
phase of the IC substrate plant in China and price pressure in a highly
competitive environment.
 
Andreas Gerstenmayer, CEO of AT&S, commented: "The financial year 2016/17 was
challenging on our path to our new positioning - from a high-end printed circuit
board producer to a provider of high-end connectivity solutions. We are quite
satisfied with the development of revenue: high capacity utilisation, continued
stable demand in the core business and the first contributions to revenue from
Chongqing helped us generate record revenue. Once again, we significantly
outperformed the entire market, which declined during the same period.
Profitability in the core business is still high, which shows that we are
positioned in the right markets with the right customers. The partial upgrade of
the Shanghai plant to the next technology generation is proceeding well.
However, the start-up of the IC substrate plant in China kept us very busy: by
the end of the financial year, the plant for IC substrates had not yet reached
the planned output and efficiency level due to technical challenges with the
equipment. We have largely resolved the technical issues and clearly improved
operationally. Unfortunately, significant price pressure in the area of IC
substrates overcompensate this development. The semiconductor industry, which we
supply with IC substrates, leaves technology generations in the market for
longer than in the past, and demand for the relevant applications such as
desktop computers and notebooks continued to decline. We are working on
appropriate solutions and are still convinced that this is the right step for
profitable growth of AT&S in the future."
 
Asset, financial and earnings position
AT&S increased revenue by 6.8% from EUR 762.9 million to EUR 814.9 million in
the reporting period as core business was still growing and first revenues were
generated with IC substrates, and thus slightly exceeds the forecast for the
year.
 
Based on the start-up effects for the Chongqing project (EUR 71.2 million) and
continued price pressure, especially in the area of mobile devices, EBITDA
decreased from EUR 167.5 million to EUR 130.9 million. As the Chinese renminbi
was lower, exchange rate effects had a positive impact of EUR 26.0 million in
EBIDTA. Adjusted* EBITDA amounted to EUR 194.8 million, thus exceeding the high
value of the previous year by 8.1%. The EBITDA margin was at 16.1% and thus -5.9
percentage points below the very high prior-year level of 22.0%. The adjusted
margin, at 25.4%, clearly exceeded the high adjusted level of 23.7% of the
previous year.
 
Depreciation of property, plant and equipment and amortisation of intangible
assets amounted to EUR 124.7 million (previous year: EUR 87.4 million) and
increased by EUR 37.3 million, primarily due to the Chongqing project.
Consequently, EBIT declined by EUR 70.4 million or -91.4% to EUR 6.6 million.
Adjusted* EBIT rose by 15.3% to EUR 119.0 million (previous year: EUR 103.2
million). The EBIT margin was 0.8% (previous year: 10.1%). The adjusted* margin
amounted to 15.5% and thus exceeded the adjusted prior-year level of 13.6% by
1.9 percentage points.
 
Finance costs - net deteriorated from EUR -8.1 million to EUR -17.5 million,
which was primarily attributable to exchange rate effects. Tax expense remained
constant at EUR 12.0 million (previous year: EUR 12.9 million).
 
The profit for the year dropped from EUR 56.0 million in the previous year to a
loss of EUR -22.9 million and earnings per share declined from EUR 1.44 to EUR -
0.59.
 
Cash flow and statement of financial position
Cash flow from operating activities before changes in working capital amounted
to EUR 90.5 million vs EUR 145.9 million in the previous year. Cash flow from
investing activities - investments in the plants under construction in
Chongqing, technology investments in other locations and investments in
financial assets - amounted to EUR -161.1 million (previous year: EUR -
342.2 million.).

Equity decreased by 5.1% to EUR 540.1 million due to the loss for the year and
the dividend paid in the amount of EUR 14.0 million. The resulting equity ratio,
at 37.6% was -4.7 percentage points below the value of March 31, 2016, as
expected.
 
Net debt rose from EUR 263.2 million at 31 March 2016 to EUR 380.5 million. This
expected increase resulted from the high investment activities and the effects
related to the start-up of the Chongqing project. The net gearing ratio
increased to 70.5% (previous year: 46.3%). AT&S has cash liquid funds totalling
EUR 203.5 million available (previous year: EUR 171.9 million). In addition,
AT&S has EUR 200.9 million of unused credit lines as a financing reserve.
 
Key financials:


According to IFRS;       2015/16             2016/17               Change
in EUR million         01.04.2015-         01.04.2016-
                       31.03.2016           31.03.2017
Revenue                          762.9                814.9                 6.8%
EBITDA                           167.5                130.9               -21.9%
EBITDA margin (in                 22.0                 16.1                    -
%)
EBITDA adjusted*                 180.2                194.8                 8.1%
EBITDA margin                     23.7                 25.4                    -
adjusted (in %)*
EBIT                              77.0                  6.6               -91.4%
EBIT margin (in %)                10.1                  0.8                    -
EBIT adjusted*                   103.2                119.0                15.3%
EBIT margin                       13.6                 15.5                    -
adjusted (in %)*
Profit/loss for the               56.0                -22.9              > -100%
year
Cash flows from                  145.9                 90.5               -38.0%
operating

activities before
changes in working
capital

Net CAPEX                        254.3                240.7                -5.3%
Equity ratio                      42.3                 37.6                    -
Net debt                         263.2                380.5                44.6%
Earnings per                      1.44                -0.59              > -100%
average number of

shares outstanding
(in EUR)

 
Mobile Devices & Substrates segment with revenue growth; earnings still
influenced by Chongqing start-up effects
The increase in revenue by 6.2% to EUR 573.0 million in the Mobile Devices &
Substrates segment is primarily based on revenue from Chongqing. Compared with
the previous year, the segment's EBITDA declined by EUR 57.9 million or -45.8%
to EUR 68.5 million due to start-up effects of the Chongqing project, the
substantial increase in price pressure on IC substrates and the lost capacities
in the fourth quarter resulting from a partial upgrade of the Shanghai plant.
The EBITDA margin amounted to 12.0% (previous year: 23.4%). The adjusted* EBITDA
was EUR 135.7 million (previous year: EUR 139.6 million), resulting in an
adjusted* EBITDA margin of 25.9%, which is at the prior-year level of 26.0%.
 
Automotive, Industrial, Medical segment with increases in revenue and earnings
In the Automotive, Industrial, Medical segment, revenue was up 7.6% to EUR 351.5
million. This positive development affected all sectors, with Automotive and
Industrial recording product-mix-related revenue growth, while Medical grew in
both qualitative and quantitative terms. EBITDA rose by 71.1% to EUR 51.5
million, which was a result of operational improvements and the release of
provisions for restructuring. The EBITDA margin thus amounted to 14.6% after
9.2% in the previous year. The adjusted* EBITDA was EUR 48.1 million, which
corresponds to an EBITDA margin of 14.0% (previous year, adjusted: 9.2%).
 
Status Chongqing
As at 31 March 2017, AT&S invested EUR 455.3 million in the Chongqing project.
The significant operational improvements in the IC substrate plant, which had
already been achieved, were overcompensated by price pressure. The second
production line was started in December 2016 and is running according to plan.
Both lines should reach the planned output and efficiency level in the second
half of 2017. In plant 2, the first production line is being converted to the
mSAP technology, while the second production line for mSAP is undergoing
qualification.

Outlook for the financial year 2017/18
AT&S is convinced to have taken the right steps for a broader positioning in a
changing supply chain with its strategic focus on high-end technologies and
applications in the existing business as well as with the establishment of an
expanded technology portfolio based on IC substrates and the next technology
generation (mSAP).
 
The transformation from a high-end printed circuit board producer to a high-end
interconnect solutions provider is a prerequisite for future profitable growth,
since only through continuous technology advancements and the corresponding
investments will AT&S be able to secure its position as tier-one supplier for
technology and world market leaders.
 
Effects of the financial year 2016/17 will continue and also influence the
business development in 2017/18: the market development for IC substrates, based
on the deceleration of Moore's Law, and lower demand for computing applications
(desktop computers, notebooks) lead to continued price pressure on IC
substrates. Serial production for the next technology generation (mSAP) for
mobile devices will start in the second quarter of the financial year 2017/18;
this technology is currently being installed in Shanghai and in the second plant
in Chongqing with the aim to continue to position AT&S as a leading supplier for
mobile devices. In its core business, AT&S expects continuous demand in all
customer segments in an extremely competitive environment.
 
Provided that the macroeconomic environment remains stable and the USD-EUR
currency relation stays at a similar level as in the past financial year, AT&S
expects an increase in revenue of 10-16% for the financial year 2017/18. The
EBITDA margin should range between 16-18% based on the market developments for
IC substrates and the ramp of the new technology generation (mSAP). Higher
depreciation for mainly new production lines of additional ~EUR 25 million in
the financial year 2017/18 will impact EBIT.

*Adjusted for Chongqing effects and release of provision for restructuring
Attachments with Announcement:
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http://resources.euroadhoc.com/us/7g6SAXXO
http://resources.euroadhoc.com/us/7a37Shv4

Further inquiry note:
Elke Koch, Director Investor Relations & Communications 
Tel: +43 3842 200-5925; Mobile: +43 676 8955 5925; e.koch@ats.net 

Marina Konrad, Head of Corporate Communications
Tel: +43 3842 200-5423; Mobile: +43 676 8955 5423; m.konrad@ats.net

end of announcement                               euro adhoc 
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Attachments with Announcement:
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http://resources.euroadhoc.com/us/7g6SAXXO
http://resources.euroadhoc.com/us/7a37Shv4


company:     AT & S Austria Technologie und Systemtechnik Aktiengesellschaft
             Fabriksgasse  13
             A-8700 Leoben
phone:       03842 200-0
mail:     e.koch@ats.net
WWW:      www.ats.net
sector:      Technology
ISIN:        AT0000969985
indexes:     WBI, Prime Market, VÖNIX, ATX GP
stockmarkets: official market: Wien 
language:   English
 



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