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© at&s PCB | July 28, 2016

AT&S starts next phase of transformation

AT&S starts the new financial year 2016/17 with the expected, usual seasonality of mobile devices and the corresponding start-up effects of the new plants in Chongqing.
Andreas Gerstenmayer, CEO of AT&S, commented: “Starting with the financial year 2016/17, we are beginning the next phase of transformation, which will result in a completely new positioning of AT&S in the market, but also in a new dimension of the company. Until the new plants in Chongqing, China, have been ramped up and reach the break-even, the start-up effects and higher depreciation will be clearly reflected in the results. We have already taken this into account in our guidance for the year, but we expect the effects in the first quarter to be stronger than in the coming quarters. However, we have to pursue this course in order to ensure the profitable growth of AT&S on a sustained basis in the future.”

“Moreover, we see the usual seasonality in the first quarter, which was barely existent in the first quarter of last year. The ramp-up of the plant for IC substrates is technically highly demanding and is currently slightly flatter than expected. However, we still stick to our target of full utilisation of the first production line towards the end of the calendar year 2016. Ahead of schedule we started plant 2, with the first production line for substrate-like PCBs, with the first sub-processes.”

Revenue of the first quarter of 2016/17 amounted to EUR 178.9 million and was lower than the value of EUR 194.4 million in the same period of the previous year, which hardly showed any seasonality due to the exceptionally strong demand for mobile devices, and maintained the level of the fourth quarter of 2015/16 (EUR 178.5 million).

Earnings before interest, taxes, depreciation and amortisation (EBITDA) amounted to EUR 18.8 million vs. EUR 45.5 million in the comparative period of the previous year and were primarily based on start-up effects of the Chongqing project (Q1 2016/17: EUR 19.3 million). Adjusted for the start-up effects of the Chongqing project, EBITDA amounted to EUR 38.1 million.

Consequently, the EBITDA margin dropped 12.9 percentage points compared with the prior-year period to 10.5 percent. Adjusted for the Chongqing effects, the EBITDA margin amounts to 21.9 percent, thus remaining at a very high level (comparative period of the previous year: 23.3 percent).

The EBIT margin was minus 5.1 percent in the first quarter of 2016/17 and thus lower than in the comparative period, at 12.3 percent; the adjusted margin amounted to 11.0 percent (Q1 2015/16: 13.2 percent).

The net profit of EUR 19.6 million in the prior-year period fell to a loss for the current period of EUR minus 13.6 million due to the start-up effects of the Chongqing project and significantly higher negative finance costs.

Cash flow and statement of financial position

Cash flows from operating activities before changes in working capital amounted to EUR 8.6 million vs. EUR 44.7 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 – totalled EUR minus 101.5 million (prior-year period: EUR minus 40.3 million).

Equity declined from EUR 568.9 to 553.5 million due to the loss for the period and negative currency translation differences of EUR 1.8 million. The reduced equity, the issue of a promissory note loan and higher total assets, resulted in the equity ratio of 37.2 percent, which was lower than at 31 March 2016 (42.3 percent).

As expected, net debt rose from EUR 263.2 million to EUR 342.4 million due to the very high investment activities. Consequently, the net gearing ratio amounted to 61.9 percent at 30 June 2016 (31 March 2016: 46.3 percent).

Outlook for financial year 2016/17 confirmed

Against the backdrop of slower growth in parts of the existing customer segments and because of growing competition, AT&S expects stronger seasonality again in the first and fourth quarters of the financial year 2016/17 and continued low visibility. Provided that the macroeconomic environment remains stable, the USD-EUR currency relation stays at a similar level as in the past financial year 2015/16 and demand is stable in the core business, the management expects an increase in revenue of 10-12 percent for the financial year 2016/17.

Based on the expected start-up costs for the further ramp-up in Chongqing, the EBITDA margin should range between 18-20 percent, the EBITDA margin in the core business, however, should be at a similar level as in the financial year 2015/16. Higher depreciation and amortisation of an additional EUR 40 million p.a. for the Chongqing project will have a significant influence on EBIT.

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