As expected, Siltronic AG’s business performance in Q2 2024 was again characterized by weak demand in the wafer market, which resulted from continued increased inventories in the chip industry. Due to the lower wafer area sold, half-year sales of EUR 694.8 million were significantly lower than in the same period of the previous year (H1 2023: EUR 808.2 million). However, at EUR 351.3 million, sales in Q2 2024 slightly exceeded the previous quarter (Q1 2024: EUR 343.5 million) by 2.3 percent.

“Q2 was in line with expectations. On a positive note, the end markets, partially driven by Artificial Intelligence, will grow this year. However, this is not yet reflected in our order situation due to still elevated inventory levels. We are pleased that we were able to slightly increase our sales in Q2 compared to the previous quarter and continued to achieve a solid EBITDA margin of 25.8 percent,” comments Dr. Michael Heckmeier, CEO of Siltronic, on the development.

Business development in H1 2024 influenced by weak demand, sales prices almost stable

In Q2 2024, Siltronic generated sales of EUR 351.3 million, up 2.3 percent on the previous quarter (Q1 2024: EUR 343.5 million) due to the increase in wafer area sold. Sales prices were almost unchanged quarter-on-quarter. Sales of EUR 694.8 million were generated in H1 2024 (H1 2023: EUR 808.2 million). The decline is primarily due to the lower sales volume. Price and currency effects had no significant impact in the half-year comparison.

On the cost side, the increase in wafer area sold and higher depreciation due to investments had a particularly noticeable impact on the quarter-on-quarter comparison. As expected, a small loss from currency hedging transactions was recognized in the other operating result in Q2.

As a result, EBITDA in Q2 2024 remained almost unchanged compared to the previous quarter at EUR 90.6 million (Q1 2024: EUR 90.8 million) despite a slight increase in sales. At 25.8 percent, the EBITDA margin remained at a solid level (Q1 2024: 26.4 percent). In a half-year comparison, EBITDA fell to EUR 181.4 million (H1 2023: EUR 243.8 million), mainly due to lower demand, and reached a margin of 26.1 percent (H1 2023: 30.2 percent).

The decline in costs due to the lower sales volume was mitigated by a lower fixed cost dilution, and a lower currency hedging result was also noticeable in the half-year comparison. In addition, H1 2024 saw an increase in depreciation and amortization.

Net profit for the period fell from EUR 27.7 million in Q1 2024 to EUR 22.4 million in Q2 and from EUR 133.9 million in H1 2023 to EUR 50.1 million in H1 2024. In addition to the effects described above, a lower financial result due to investments contributed to the reduction. Earnings per share amounted to EUR 0.73 in Q2 2024 and EUR 1.59 in H1 2024.

Net assets and financial position still affected by high investments

With an equity ratio of 46.5 percent as of June 30, 2024, Siltronic continues to have a good balance sheet quality (December 31, 2023: 46.6 percent). Cash and cash equivalents and short-term financial investments fell by EUR 129.5 million to EUR 327.4 million in H1 2024.

This was due to net payments for investments of EUR 411.2 million with a focus on the new 300 mm fab in Singapore and the dividend payment of EUR 36.0 million to Siltronic AG’s shareholders. In the same period, these payments were opposed by cash inflows of EUR 171.4 million from operating activities and cash inflows of EUR 150.0 million from a loan that was partially drawn.

Due to the high level of investments, the net cash flow fell to EUR -252.8 million and was negative, as expected. Accordingly, net financial debt increased by a total of EUR 283.5 million to EUR 639.2 million compared to December 31, 2023.

Guidance for 2024

The Executive Board of Siltronic AG has specified its guidance published at the end of April and now expects Group sales to decline by a high single-digit percentage compared to the previous year. With a view to the financial year 2024, this is primarily due to lower volumes as well as each slightly negative exchange rate- (EUR/USD 1.10), price- and product mix effects.

The EBITDA margin is expected to be at the upper end of the previously communicated range of 23 to 25 percent. However, the EBITDA margin in H2 will not reach the level of H1. Profitability in H2 will be impacted by both slightly negative price and product mix effects as well as ramp costs for the new Singapore fab, which will start to impact earnings in Q4.

In addition, one production line is scheduled for maintenance in Q4, which will be bridged by inventory reductions and will also have a negative impact on the margin. Capex is expected to be in the range of EUR 500 million to EUR 530 million, with depreciation and amortization below EUR 300 million.

Original – Siltronic