Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Siltronic AG (SSLLF, Financial) achieved a modest quarter-on-quarter sales increase, reflecting a 1.7% rise driven by a higher wafer area sold.
- The company successfully placed a promissory note loan, attracting significant interest from investors, securing EUR370 million.
- Prices remained largely stable quarter-on-quarter with no deviations from long-term agreement (LTA) contracted prices.
- The equity ratio remained at a healthy level of 47%, indicating strong financial stability.
- Siltronic AG (SSLLF) remains on track to meet its full-year 2024 guidance, despite challenging market conditions.
Negative Points
- The company faced a persistently weak demand environment in the wafer industry, impacting sales and profitability.
- Siltronic AG (SSLLF) experienced a decrease in sales by 9% in the nine-month comparison to the previous year, mainly due to a lower wafer area sold.
- The EBITDA margin declined from around 30% to 26% due to a lower hedging result and increased depreciation.
- The company had to postpone major qualifications for its new Singapore factory to next year, affecting its EBITDA margin guidance.
- Siltronic AG (SSLLF) continues to experience negative net cash flow due to high capital expenditures for ramping up the new factory in Singapore.
Q & A Highlights
Q: What has led to the maintained sales guidance for 2024 despite challenges faced by major customers like Samsung and Intel?
A: Michael Heckmeier, CEO, explained that while they cannot comment on individual customers, the overall business is governed by a diverse customer base. The maintained sales guidance reflects an aggregated view of sales across all customers, not just individual ones like Samsung or Intel.
Q: Can you provide insights into the inventory situation and when it might normalize?
A: Michael Heckmeier, CEO, stated that the inventory situation remains unclear, with elevated levels persisting. The company relies on public data and customer insights to assess the situation, but a full recovery timeline is still uncertain.
Q: Are there risks of further production cuts due to inventory levels, particularly in the power segment?
A: Michael Heckmeier, CEO, acknowledged that while memory inventories are declining slowly, power segment inventories are increasing. The company is continuously assessing volume shifts and utilization, but specific future production adjustments remain uncertain.
Q: How is Siltronic managing its cash flow and capex in light of current market conditions?
A: Claudia Schmitt, CFO, highlighted a focus on necessary capex, with steady-state capex around EUR200 million. The company is cautious with expansionary capex, leveraging shorter equipment lead times to make decisions based on market recovery.
Q: What is the current status of the Singapore fab ramp, and how does it impact depreciation?
A: Michael Heckmeier, CEO, noted that the installed capacity will reach 100,000 wafers per month by year-end, but utilization will depend on global demand. Major customer qualifications are delayed, impacting the start of depreciation, which is expected to begin next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
