AT&S expects revenue at prior-year level

AT&S expects revenue at prior-year level

• Revenue in Q2 2024/25 € 451 million, up 29% on Q1 2024/25 and at the same level as prior-year quarter (Q2 2023/24: € 452 million; Q1 2024/25: € 349 million)
• Outlook for FY 2024/25 adjusted due to market situation
• Outlook for FY 2026/27 confirmed

Leoben – AT&S expects the market conditions of the first half of the financial year 2024/25 to continue. “In a market environment that remains highly volatile, we achieved significant increases in volume, also thanks to our customer diversification, which is progressing successfully. At the same time, however, our efforts were outweighed by massive price pressure as well as due to the current weakness of the European automotive and industrial markets,” says Peter Schneider, Spokesman of the Management Board and EVP of the Business Unit Electronics Solutions.

CFO Petra Preining explains, “The efficiency programs we have been pursuing consistently are clearly showing effect, and that makes us generally optimistic. But since the difficult conditions will also determine our development in the second half of the financial year, we now assume that this year’s revenue and adjusted EBITDA will approximately reach the level of the previous year.”

In comparison with the prior-year period, consolidated revenue was nearly constant at € 800 million in the first half of 2024/25 (PY: € 814 million). AT&S recorded a positive volume development during the reporting period, which was, however, offset by continuing high price pressure for both printed circuit boards and IC substrates.

EBITDA declined by 27% from € 217 million to € 157 million. The decline in earnings is primarily attributable to the increased price pressure and higher start-up costs. In order to counter effects such as price pressure and inflation resulting from the currently difficult market environment, AT&S consistently continued to drive its comprehensive cost optimization and efficiency program. In addition to price pressure, start-up costs in Kulim, Malaysia, and Leoben, Austria, as well as costs in connection with the cost optimization and efficiency program had a negative impact on earnings. Adjusted for these costs, EBITDA amounted to € 223 million (PY: € 249 million), which corresponds to a decline by 10%.

The EBITDA margin amounted to 19.6% (adjusted EBITDA margin: 27.9%), thus falling short of the prior-year level of 26.6% (adjusted EBITDA margin: 30.6%).

Depreciation and amortization increased by € 15 million year-on-year to € 150 million (19% of revenue) due to additions to assets and technology upgrades. EBIT fell from € 82 million to € 7 million. The EBIT margin amounted to 0.9% (PY: 10.0%). Finance costs – net declined from € -18 million in the previous year to € -50 million primarily due to higher interest expenses. This development was mainly driven by a significant increase in financial liabilities and the related financial expenses. Profit for the period decreased from € 49 million to € -63 million, leading to a decline in earnings per share by € 2.86 from € 1.02 to € -1.84.

Cash flow from operating activities amounted to € -91 million in the first half of 2024/25, down 127% on the prior-year figure. The company is currently working on a realignment of the international factoring program, which is scheduled to be implemented by the fourth quarter of the financial year 2024/25 at the latest. 

Key figures

¹⁾ Adjusted for start-up and restructuring costs

²⁾ Incl. leased personnel, average. As at September 30, 2024: 13,278

The asset and financial position at September 30, 2024 is still characterized by investing activities and the associated financing activities. Total assets increased, due to an increase in receivables and property, plant and equipment, among other things. The equity ratio declined by 0.7 percentage points to 20.0%due to the loss for the period attributable to shareholders and the high investment volume.

Cash and cash equivalents increased to € 686 million (March 31, 2024: € 676 million). In addition, AT&S has unused credit lines of € 215 million to secure the financing of the future investment program and short-term repayments.

Expected market environment

The development of the different market segments still shows significant discrepancies. While volume in the areas of mobile devices, computers and communication infrastructure prove to be stable, the automotive and industrial markets continue to be weak. AT&S expects this weakness, which primarily affects Europe, to continue into next year. Although overall PCB prices declined to a lesser degree than in the previous year, price pressure is persisting to a large extent. The pricing situation for IC substrates has aggravated and pressure remains unchanged.

In the printed circuit board segment it is above all mobile devices and data centers that show positive forecasts and drove the PCB market in the last quarter. In addition to increased investments in servers, the related communication infrastructure is now also being expanded. At the same time, lower demand for e-mobility and a general economic weakness continue to burden demand for automotive and industrial printed circuit boards. Automotive and industrial inventory levels are still high and are currently being reduced.

In the area of IC substrates, the market benefited from the recovery of client computing demand and special AI chips, whereas the classic server segment continues to be weak. A recovery is largely dependent on a general economic recovery and is therefore not expected this year.

Outlook 2024/25

Despite a few bright spots in the market, economic pressure is persisting; therefore, improving market effects were weaker than expected. As a result, the company anticipates price pressure to continue until the end of the fiscal year. To counter this effect, the company will consistently implement and further focus the ongoing efficiency programs. In addition to comprehensive cost-cutting measures, a reduction of up to 1,000 employees will be implemented at the existing locations.

The management is planning investments of roughly € 500 million for the financial year 2024/25 depending on the market environment and progress of projects. The majority of these investments will be used for the IC substrate production at the new plants in Kulim and Leoben.

The management expects price pressure and the volatile order behavior of a key customer to continue in the second half of the year. The weakness of the European automotive and industrial markets is also likely to persist. In addition, high-volume production at the two new plants will start one to two quarters later than originally planned so that these plants are not expected to contribute to revenue in the current financial year. Accordingly, the costs incurred until then will be reported as start-up costs.

For these reasons, the company has adjusted its outlook for the financial year 2024/25.

The revenue and EBITDA contribution of the plant in Ansan will continue to be included in the respective items of the consolidated statement of profit or loss until the sale process is completed (IFRS 5, Disposal Group). The proceeds from the sale will not be included in the adjusted EBITDA margin.

Guidance 2026/27

The production capacity expansion in Kulim and the expansion of the site in Leoben are still developing positively despite the currently challenging global economic situation. AT&S assumes that revenue of approximately € 3 billion will be generated in the financial year 2026/27 and expects an EBITDA margin of 27 to 32%. This forecast does not include potential revenue from the second plant built by AT&S in Kulim. The management monitors the currently tense geopolitical situation very carefully in order to be able to respond to developments and to make strategic adaptations.

^[1] Effects from the start-up of new production capacities in Kulim and Leoben and one-off costs from the implementation of the cost optimization and efficiency program