Siltronic AG has published its forecast for the financial year 2024 in an ad-hoc announcement. Due to the weakness in demand, as a result of elevated customer inventories and the associated further postponement of delivery volumes, the Executive Board expects sales for the current financial year to be in the region of the previous year.
The first six months of the financial year 2024 are likely to be affected most by the postponement of delivery volumes, meaning that sales for this reporting period are expected to be at the level of H2 2023. The forecast is based on a Euro/US Dollar exchange rate of 1.10. On a positive note, average selling prices are expected to remain stable.
The EBITDA margin, before ramp costs, will also be in the region of the previous year. Due to the commissioning of our new state-of-the-art 300 mm fab in Singapore, the margin will be reduced by up to three percentage points compared to the previous year. Ramp costs primarily comprise energy, material and labor costs.
“Our strategic growth targets until 2028 remain unchanged. In the short-term, however, the continuing weakness in demand will weigh on the development in the financial year 2024. In addition, the expected ramp costs for our new 300 mm fab in Singapore will become noticeable. With the increase in production volume over the next few years, the fab will contribute significantly to the profitable growth of Siltronic. Therefore, we stick to our medium-term ambition and expect sales to grow to more than EUR 2.2 billion and an EBITDA margin in the high 30’s until 2028,” commented Dr. Michael Heckmeier, CEO of Siltronic AG.
The Executive Board expects a noticeable reduction in energy and material costs (before ramp costs) in 2024 compared to the previous year. However, the positive effect will roughly be compensated by rising labor tariffs and the lower currency hedging result compared to the previous year. The high level of capital expenditure in recent years will almost double depreciation and amortization compared to the previous year. As a result, the EBIT will be significantly lower than in the previous year.
As already announced, capital expenditure will be more than halved compared to the previous year’s record level of EUR 1,316 million. Therefore, the company expects a significant improvement in net cash flow, although it will still remain significantly negative.
Growth targets until 2028 remain unchanged
As communicated in November 2023, significant sales growth to more than EUR 2.2 billion and an improvement of the EBITDA margin to the high 30’s are expected until 2028. This confidence is driven by the increasing relevance of global megatrends such as artificial intelligence, digitalization and electromobility and will lead to a sharp rise in demand for semiconductors and therefore also for wafers. The increase in Group profitability will be primarily driven by expected volume growth and higher cost efficiency, which will be significantly above the expected inflation-related cost increases.
Future use of funds with focus on growth, innovation and debt reduction –
Dividend proposal of EUR 1.20 for 2023 due to persistent weakness in demand
Siltronic will use the cash flows generated as a result of the above mentioned targets primarily for further organic growth, strengthening its innovative power and reducing debt. The latter had increased noticeably due to the high level of capital expenditure in the recent past. Nevertheless, Siltronic shareholders will continue to participate in the company’s success through a dividend. In view of the current difficult market situation, the Executive Board will propose to the Annual General Meeting on May 13, 2024 the payment of a dividend of EUR 1.20 per share for the financial year 2023 and thus a payout ratio of around 20 percent of the Group profit attributable to Siltronic shareholders.
“As a company in a capital-intensive and cyclical industry, we know how important a solid balance sheet policy and a forward-looking liquidity management are. That is why we will put an even stronger focus on our costs and capex this year. In view of the upcoming refinancing needs, we are convinced that our dividend proposal of EUR 1.20 represents an appropriate balance between capital discipline on the one hand and dividend continuity for our shareholders on the other,” explains Claudia Schmitt, CFO of Siltronic AG.
Despite this noticeable reduction compared to the previous year, Siltronic confirms its dividend policy for the future, according to which around 40 percent of the Group profit determined in accordance with IFRS principles, attributable to the shareholders of Siltronic AG, will be distributed. The upper limit remains unchanged at EUR 3.00 per dividend-bearing share.
Original – Siltronic
