AT&S Austria Technologie & Systemtechnik AG: AT&S successfully starts into a challenging year

AT&S successfully starts into a challenging year

• Revenue for the first quarter of 2023/24 increases by 20% to € 362 million compared to Q4 2022/23, but is 28% lower than in Q1 2022/23 (Q1 2022/23: € 503 million; Q4 2022/23: € 302 million)
• Adjusted EBITDA of € 92 million corresponds to a margin of 25.5%
• Guidance for FY 2023/24 and 2026/27 confirmed
• New reporting structure since April 1, 2023

Leoben – In a challenging market environment, AT&S had a solid start to the new financial year 2023/24. “We managed to stabilise the operating development in a persistently difficult market environment with forecasts changing almost daily. We owe this positive situation in particular to our efficiency and cost optimisation programmes, which were introduced in a timely manner and are taking effect faster than planned. Coupled with our continuous strength in innovation, this makes us a reliable partner for existing and new customers alike,” CEO Andreas Gerstenmayer outlines the company’s perspective. “We are convinced that AT&S is well-positioned in market segments benefitting substantially from digitalisation and electrification. Therefore, we continue to push our projects in Kulim and Leoben and are very satisfied with the progress made,” says Gerstenmayer.

As of April 1, 2023, AT&S has reorganised its “Mobile Devices & Substrates” and “Automotive, Industrial & Medical” segments. The company’s new structure comprises the business units “Electronics Solutions” and “Microelectronics”. Reporting has been adapted accordingly. “Electronics Solutions” bundles the printed circuit board and module activities across the Group, while “Microelectronics” focuses on IC substrates.

In comparison with the strong prior-year quarter, consolidated revenue declined by 28% to € 362 million in the first quarter of 2023/24 (PY: € 503 million). Adjusted for currency effects, consolidated revenue also fell by 28%. This decrease was primarily driven by the cooling demand dynamics, in particular for IC substrates, which AT&S was already faced with in the second half of the previous year. In the Electronics Solutions segment, the decline compared to the prior-year quarter was caused by the absence of a new model series of mobile phones.

EBITDA declined by 45% from € 137 million to € 75 million. The decline in earnings is primarily attributable to the decrease in consolidated revenue. In order to counter effects such as price pressure and inflation, which result from the currently difficult market situation, AT&S already initiated comprehensive cost optimisation and efficiency programmes in the past financial year. These programmes already made a higher contribution in the first quarter of the financial year 2023/24 than originally planned. Compared with the financial year 2022/23, cost reductions totalling € 440 million are expected for the following two years.

Currency fluctuations of the US dollar and the Chinese renminbi had a positive influence of € 15 million on earnings. In addition to lower demand, the start-up costs in Kulim, Malaysia, and Leoben, Austria, had a negative impact on earnings. Adjusted for start-up costs, EBITDA amounted to € 92 million (PY: € 145 million), which corresponds to a decrease by 36%.

The EBITDA margin amounted to 20.7% (EBITDA margin adjusted for start-up costs: 25.5%), thus falling short of the prior-year level of 27.3% (EBITDA margin adjusted for start-up costs: 28.8%). Depreciation and amortisation increased by € 2 million to € 66 million (18% of revenue) due to additions to assets and technology upgrades. EBIT fell from € 73 million to € 8 million. The EBIT margin amounted to 2.3% (PY: 14.5%). Finance costs – net declined from € 34 million in the previous year to € -5 million primarily due to a change in currency effects on the high level of cash and cash equivalents. Profit for the period decreased by € 96 million to € -2 million, leading to a decline in earnings per share by € 2.53 from € 2.35 to € -0.18.

The financial position as of June 30, 2023 is still characterised by investing activities and the associated financing activities. Despite additions to assets, total assets decreased to € 4,004 million, down 4% compared to the balance sheet date March 31, 2023, due to the repayment of financing. As a result of the high investment volume and due to negative foreign exchange effects in other comprehensive income (OCI), the equity ratio declined by 2.2 percentage points to 25.6%.

Cash and cash equivalents declined to € 630 million (March 31, 2023: € 792 million). In addition, AT&S has unused credit lines of € 728 million to secure the financing of the future investment programme and short-term repayments.

Key figures

¹⁾ Adjusted for start-up costs

²⁾ Incl. leased personnel, average. As at June 30, 2023: 14,165

Outlook 2023/24

Depending on the market development, AT&S will continue to push ahead the investment project in Kulim and the expansion of the site in Leoben and implement technology upgrades at other locations in the financial year 2023/24. In view of the highly volatile environment, the ongoing investment projects will be reviewed at frequent intervals and adapted to the respective current situation if required.

The expectations for AT&S’s segments are currently as follows: In the markets for IC substrates, demand for notebooks in 2023 is expected to be lower than in 2022. The negative impact on the supplier chain has been aggravated by high inventory levels. According to current forecasts, this affected especially the first quarter of 2023/24 (i.e., the second calendar quarter of 2023), with a slight recovery of demand anticipated towards the end of the calendar year. Nevertheless, the prior-year level will not be reached again until the end of the year 2024. Demand for IC substrates for servers will benefit from the technology shift towards heterogeneous integration[1] in the medium term.

In the area of mobile devices, the 5G mobile communication standard as well as the module printed circuit board business will remain positive drivers. In the Automotive segment, the semiconductor shortage has eased and the growth trend is intensifying as the electronic content per vehicle continues to increase. In the Industrial and Medical segments, the market is expected to stagnate or even decline during the current year.

As part of the strategic projects, the management is planning investments totalling up € 800 million for the financial year 2023/24 depending on the market environment and progress of projects. Roughly € 100 million are budgeted for basic investments. Planned investments of approximately € 200 million in the financial year 2022/23 have been postponed to the financial year 2023/24. As a result, the planned investment volume currently totals up to € 1.1 billion.

AT&S expects the deterioration of the market environment in the second half of 2022/23 to continue initially. High inflation rates, rising interest rates, recession risks as well as geopolitical developments continue to represent additional elements of uncertainty for the end markets.

In this challenging environment, AT&S expects a gradual improvement in revenue in the course of the year, which will result in annual revenue between € 1.7 and 1.9 billion. Not including effects from the start-up of the new production capacities in Kulim and Leoben totalling approximately € 100 million, the adjusted EBITDA margin is expected to range between 25 and 29%.

Guidance 2026/27

The progress of the production capacity expansion in Kulim and the expansion of the site in Leoben is still positive despite the challenging global economic situation. The management is convinced that the major trends – digitalisation and electrification – are intact. Therefore, AT&S assumes that revenue of approximately € 3.5 billion will be generated in the financial year 2026/27 and expects an EBITDA margin in the range from 27 to 32%. The management monitors the currently tense geopolitical situation very carefully in order to be able to respond to developments at any time and to make strategic adaptations. With the projects in Kulim and Leoben, which were adopted in 2021, the company proved its vision and took an important step towards diversifying its value added structure.

AT & S Austria Technologie & Systemtechnik Aktiengesellschaft – Advanced Technologies & Solutions
AT&S is a globally leading manufacturer of high-end printed circuit boards and IC substrates. AT&S industrialises leading-edge technologies for its core business segments IC substrates, Mobile Devices, Automotive & Aerospace, Industrial and Medical. AT&S has a global presence with production sites in Austria (Leoben, Fehring) and plants in India (Nanjangud), China (Shanghai, Chongqing) and Korea (Ansan near Seoul). A new high-end production site for IC substrates is currently being established in Kulim, Malaysia. And in Leoben, a unique European competence centre with connected series production for IC substrate technologies is being built right now. The company employs more than 14,000 people. For further information please visit www.ats.net

Press contact:

Gerald Reischl, Vice President Corporate Communications

Tel: +43 3842 200 4252; Mobile: +43 664 8859 2452; g.reischl@ats.net

Investor Relations contact:

Philipp Gebhardt, Senior Director Investor Relations

Tel: +43 3842 200 2274; Mobile: +43 664 7800 2274; p.gebhardt@ats.net

AT & S Austria Technologie & Systemtechnik Aktiengesellschaft

Fabriksgasse 13
8700 Leoben / Austria
www.ats.net

^[1] Heterogeneous integration means that the different functionalities of a single microchip are split up into chiplets, which reduces costs and increases performance. However, this requires significantly larger and more complex IC substrates to ensure the connection between the individual chiplets.