LEOBEN, AUSTRIA – AT&S today reported first half-year revenue of €490.3 million ($542.5 million), down 5.1% from a year ago, for the period ended Sept. 30.
The results were an improvement from the company's fiscal first quarter revenue of €222.7 million.
Sales volume for IC substrates and medical/healthcare segments were offset by lower demand for boards for mobile devices and industrial applications. Automotive was flat, AT&S said, despite radical changes in the mobility market.
The decline in revenue for the mobile devices segment is attributable to a slower ramp of the latest smartphone generation and changing product mix. Automotive and industrial are currently faced with lower demand and higher pricing pressure, the fabricator said.
The company also pointed to an uncertain general macroeconomic environment, including trade disputes and Brexit, which have created a cautious climate. Uncertainties in the automotive industry regarding the future powertrain and far-reaching technological change as well as the weak industrial business also led to slower demand for AT&S.
For the period, EBITDA fell 27% to €101.1 million and EBITDA margin dropped 620 basis points to 20.6%. EBIT was down 59% year-over-year to €29.4 million but rose sequentially from a loss of €600,000. Net income was down 64% to €19.5 million.
At period's end, AT&S had cash and cash equivalents of €259.6 million.
Company management approved investments of up to €1 billion toward capacity increases at sites in Chongqing, China, and Leoben, to strengthen its IC substrate business. Investments will focus on Chongqing, where AT&S is working in "close cooperation" with Intel. “The trend of miniaturization and modularization addresses many applications in the electronics industry and consequently also the area of microprocessors," said Andreas Gerstenmayer, CEO. "We expect the circle of industries interested in our solutions to expand substantially in the coming years.”
The company expects revenue to double to €2 billion in the next five years, a compound annual growth rate of roughly 15%, with an EBITDA margin in the range of 25% to 30%. AT&S said demand has picked up and capacity utilization is currently good in the mobile devices segment, leading to expectations that full-year revenue will match the previous year's levels, with EBITDA margin will be in the range of 20% to 25%.
It expects to spend €80 million to €100 million through the end of this fiscal year in maintenance and technology upgrades and, depending on market conditions, an additional €100 million in capacity and technology upgrades.
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