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AT&S ended the financial year 2017/18 with outstanding results. “AT&S accomplished record levels for revenue and EBITDA in 2017/18. Our investments of the past years are now bearing fruit, and the technology generations successfully introduced to the market contributed to growth,” said Andreas Gerstenmayer, CEO of AT&S.
Asset, Financial and Earnings Position
Despite the challenging market and currency environment, AT&S increased consolidated revenue by 21.7% to €991.8 million in the financial year 2017/18 (previous year: €814.9 million). Strong demand in the automotive, industrial and medical segments as well as for high-end printed circuit boards for mobile devices, especially for the new technology generations mSAP and IC substrates, contributed to revenue growth. Negative currency effects, which were attributable to the increasingly weakening US dollar, had an effect of €-46.8 million on the Group’s revenue.
AT&S recorded a 72.6% increase in EBITDA to €226.0 million in the financial year 2017/18 (previous year: €130.9 million). This increase primarily resulted from a generally high operating performance (utilisation, yield, efficiency) at all plants and the successful introduction and fast optimisation of the new technology generation mSAP, for which AT&S has managed to achieve a leading market position. Negative currency effects from translation and valuation effects influenced EBITDA with € -28.5 million. The EBITDA margin rose from 16.1% to 22.8%, up 6.7 percentage points on the previous year.
An earnings analysis of the individual quarters shows that the financial year 2017/18 was characterised by a pronounced but not unusual seasonality, above all the fourth quarter; nevertheless, earnings exceeded the comparative figures of the previous year in all quarters.
Depreciation and amortisation rose primarily due to the additional lines at the Chongqing plant and amounted to € 135.7 million (previous year: €124.7 million). EBIT increased to € 90.3 million (previous year: € 6.6 million) due to the good operating development and the favourable product mix. Accordingly, the EBIT margin improved to 9.1% (previous year: 0.8%).
Finance costs – net improved from €-17.5 million to €-14.8 million and thus remained at a low level. Tax expense increased to € 19.0 million in the reporting period in line with earnings (previous year: € 12.0 million). AT&S (China) Company Limited was granted the favoured tax status as a “High and New-Technology Enterprise (HNTE)” with retroactive effect for the calendar year 2017.
Consequently, the loss of € -22.9 million recorded in the previous year was turned into a profit for the year of € 56.5 million. Earnings per share improved to € 1.38 (previous year: € -0.59).
Cash Flow and Statement of Financial Position
As a result of the significant improvements in earnings at the Chinese plants, cash flow from earnings before changes in working capital increased from € 90.5 million to € 192.1 million. Due to the very good operating development, AT&S was able to finance all investments in property, plant and equipment from current business.
Equity rose to € 711.4 million (previous year: € 540.1 million). The increase results from the net proceeds of the placement of the hybrid bond and the profit for the year. Currency differences had a negative impact on equity.
Net debt decreased to € 209.2 million (previous year: € 380.6 million) due to the issue of the hybrid bond and strong cash flow from earnings before changes in working capital. Gearing consequently declined to 29.4% and was thus significantly below the prior-year level of 70.5%. The key figure net debt/EBITDA, which reflects a fictitious debt repayment period, improved from 2.9 years to 0.9 years and was thus clearly below the internal limit of 3.0 years.
Mobile Devices & Substrates Segment with Significant Increase in Revenue and Earnings
Thanks to the successful introduction of the new mSAP technology and the increased output of IC substrates, the segment’s revenue rose significantly. In addition, the sites in Chongqing und Shanghai operated at a high utilisation level. Revenue, at € 738.9 million, exceeded the prior-year figure of € 573.0 million by 29.0%, although revenue was reduced by € 46.7 million, primarily due to the negative price development of the US dollar.
The segment’s EBITDA amounted to € 179.0 million, thus exceeding the prior-year figure of € 68.5 million. The increase in EBITDA resulted from the high utilisation and the good operating performance of the sites in Shanghai and Chongqing. The continued price pressure on IC substrates, negative exchange rate developments and higher raw material prices had a negative impact on earnings. The EBITDA margin of the Mobile Devices & Substrates segment, at 24.2%, exceeded the prior-year value of 12.0% significantly.
Automotive, Industrial, Medical segment
With revenue of € 364.9 million (previous year: € 351.5 million), the Automotive, Industrial, Medical segment continued to grow by 3.8%. The positive development was recorded in all business segments and reflects the successful strategy as a high-end supplier. EBITDA declined by € 4.7 million to € 46.8 million (previous year: € 51.5 million). The EBITDA margin decreased by 1.8 percentage points to a value of 12.8% (previous year: 14.6%). Adjusting the EBITDA of the previous year for the one-off effect it includes (reversal of a provision for restructuring of € 7.2 million), earnings would have increased by € 2.5 million or 5.6%.
AT&S has set itself ambitious targets based on the strategy “More than AT&S”. With a clear focus on new interconnect solutions by combining existing and new technologies, the target is to increase revenue to € 1.5 billion.
Aiming to achieve revenue of € 1.5 billion and an EBITDA margin of 20 to 25%, AT&S will consistently pursue the successful path of value-added growth. “AT&S distinguishes itself successfully through technology, quality and specialisation. We will make every effort to expand our leading position regarding technology, quality and results. In the existing segments, we strive to grow by expanding our service portfolio – under the motto “More than AT&S” – and to drive business with innovative interconnect solutions for electric, electronic and mechanical components in line with the (“all-in-one”) integration of ever more powerful modules with increasingly more functionality. By combining additional services (such as design and test) and the technology toolbox, we can position ourselves as a solution provider for complex interconnect solutions,” said Andreas Gerstenmayer, CEO of AT&S. The target of € 1.5 billion would require above-average revenue growth of roughly 9% per year, thus significantly exceeding the industry average.
Outlook for the Financial Year 2018/19
The investments planned for the current period focus on technology expansion and building capacity for high-frequency printed circuit boards in the area of autonomous driving at the existing sites in Nanjangud, India (near Bangalore) and Fehring, Austria (Southeast Styria). Investments in the range of roughly € 70 to 100 million are planned for maintenance investments and minor technology upgrades for current business activities. Depending on the market development, investments in capacity and technology expansions could increase by another € 100 million.
For the financial year 2018/19, AT&S expects revenue growth of up to 6% based on a first quarter characterised by strong seasonality, a stable market and macroeconomic environment and unchanged exchange rates in comparison with 31 March 2018. On the basis of a continued stable, optimal product mix, an EBITDA margin in the range of 20 to 23% is expected.