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© begemot 30 dreamstime.com PCB | January 29, 2016

AT&S continues growth course in the first nine months

AT&S AG increased revenue and operative results in the first nine months, which ended on 31 December 2015, compared to last year’s period.
“After a very positive first half year, demand at the end of the third quarter showed some slight slow-down for mobile devices. Based on the first nine months we were able to uphold the exceptionally high level of the previous year and once again outperformed the market, which only grew by an average of 1.5% in the same period“, says AT&S CEO Andreas Gerstenmayer.

Revenue and earnings

This development led to an increase in revenue by 19.4 percent from EUR 489.4 million to EUR 584.3 million. The significant growth was based on the fact that demand for PCBs for mobile devices was untypically high in the first half of the year, and on continued high demand for automotive applications. Organic growth amounted to 7.6 percent or EUR 37.0 million. Higher exchange rates compared with the previous year, in particular EUR-USD, contributed 11.8 percent or EUR 57.9 million to revenue.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by EUR 12.9 million or 10.2 percent in the first nine months, from EUR 127.3 million to EUR 140.2 million. In addition to the high production output, this gratifying result was also attributable to a good product mix. Exchange rate effects accounted for a positive contribution of EUR 10.9 million and resulted from positive USD effects as well as negative effects arising from revenue charged in euros while the related production costs were incurred in Indian rupees, South Korean won and Chinese renminbi.

The EBITDA margin amounted to 24.0 percent in the first nine months, thus 2.0 percentage points below the very high level of 26.0 percent in the previous year, which was characterised by income from a compensation payment in the second quarter and above-average demand for mobile devices in the third quarter. With this EBITDA margin, AT&S is still one of the most profitable PCB producers worldwide.

Profit rose by EUR 9.9 million or 19.6 percent, from EUR 50.3 million to EUR 60.2 million, due to the positive business development, a significant improvement in the financial result (EUR -2.7 million vs. EUR -4.4 million in the previous year) and a lower tax rate of 18.0 percent. This results in an improvement in earnings per share from EUR 1.29 to EUR 1.55.

Business Unit Mobile Devices & Substrates

Accumulated demand for high-end HDI printed circuit boards in the first nine months was still very good, but experienced a slight slow-down at the end of the third quarter. Moreover, exchange rates, which are still favourable from a euro perspective, had a positive impact. Overall, this led to a substantial increase in revenue by EUR 88.6 million or 26.8 percent, from EUR 331.0 million to EUR 419.6 million compared with the reporting period of the previous year. Revenue from external customers amounted to EUR 351.5 million, which corresponds to a 26.6 percent increase. EBITDA was up 13.8 percent to EUR 109.1 million. At 26.0 percent, the EBITDA margin was three percentage points below the very high level of the previous year and was affected by unfavourable exchange rate developments from sales between the business units.

Business Unit Automotive, Industrial, Medical

With an increase by EUR 22.6 million or 10.1 percent, this segment improved revenue from EUR 224.1 million in the previous year to EUR 246.7 million. The main driver was the continuously growing demand by the automotive sector, which reflects the trend towards more electronic components in vehicles, and by the medical segment. Demand in the industrial segment was slightly below the high level of the previous year. The segment was impacted by currency-related increases in production costs in India and Korea, which could only partially be passed on to customers. Overall, this led to a decline in EBITDA by EUR 2.3 million or 8.3 percent to EUR 24.9 million. The EBITDA margin decreased by 2.0 percentage points from 12.1 to 10.1 percent.

Set-up Chongqing site

AT&S invested EUR 122.1 million in additions to assets in Chongqing as of 31 December 2015. The set-up of the two new plants in Chongqing proceeded according to schedule in the first nine months. The phase of qualification of the IC Substrates plant (determination of all parameters under serial production conditions) is completed. The certification, announced for beginning of 2016, by the initial customer is currently in the final phase with last tests for fine adjustments of single parameters. Certification is shortly expected.

This milestone is the prerequisite for the gradual start-up of the first production line for IC substrates. IC substrates are produced at this plant as a connection between chips and printed circuit boards for applications such as notebooks and PCs. The expected impact related to the ramp-up of this plant will become effective starting in the fourth quarter (01 Jan – 31 Mar 2016) of the AT&S financial year and has been taken into account in the guidance for the financial year 2015/16. Infrastructure for the second plant which will produce substrate-like PCBs starting second half 2016, is being completed.

Outlook for the financial year 2015/16 confirmed Management expects the satisfactory capacity utilisation to continue for the financial year 2015/16 provided that the macroeconomic environment remains stable and customer demand continues at a good level. On the basis of the organic growth in the first nine months, and expected seasonality in the next three months, management confirms its revenue guidance of EUR 740 million. Influenced by the expected costs of the start-up of the new plants in Chongqing, the EBITDA margin should exceed 19 percent (guidance at the beginning of the financial year: 18-20 percent). This includes an EBITDA margin in the core business at a similar level of the previous year.

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