austriamicrosystems reports second quarter and first half results
Key financial data for the second quarter and first six months of 2009
Unterpremstaetten, Austria (July 27, 2009) — austriamicrosystems (SIX: AMS), a leading global designer and manufacturer of high performance analog ICs for communications, industrial, medical and automotive applications, reports a negative development in revenues and earnings and an operating and net loss for the second quarter and first half of 2009. The results highlight a difficult market environment in most target markets in the first half of 2009. For the second half of 2009, a significant improvement in revenues and operating results is expected.
austriamicrosystems’ business showed an unsatisfying performance in the second quarter and first half of 2009 reflecting the impact of the global economic weakness. Consolidated second quarter group revenues reached EUR 28.3 million, down 39% from EUR 46.3 million in the same quarter 2008. Group revenues for the first six months of 2009 were EUR 53.8 million, down 39% from EUR 87.5 million recorded in the first half of 2008. On a constant currency basis, second quarter revenues were 43% lower compared to the second quarter last year and first half revenues were 43% lower compared to the first half 2008. Compared to the first quarter 2009, second quarter revenues increased by 11% sequentially.
In the second quarter, gross margin reached 22% compared to 51% in the same quarter last year, due to the negative impact from continued low levels of capacity utilization in our production with its high proportion of fixed costs. For the first half of 2009, gross margin reached 26% compared to 51% in the first half of 2008. The result from operations (EBIT) for the second quarter was a loss of EUR 11.7 million compared to a profit of EUR 6.4 million in the second quarter of 2008. This negative result was driven by the reduced gross margin due to the low capacity utilization and our continuing investment in customer-centered product R&D. For the first half of 2009, the EBIT was a loss of EUR 20.2 million compared to a profit of EUR 10.1 million in the same period 2008.
The net loss for the second quarter 2009 was EUR 10.7 million compared to a profit of EUR 5.9 million in the same period last year. Basic and diluted earnings per share for the second quarter were CHF -1.52 / EUR -1.00 (2008: CHF 0.87 / EUR 0.54). The net loss for the first half-year 2009 was EUR 18.7 million (CHF -2.64 / EUR -1.76 per share, basic and diluted) compared to a profit of EUR 9.1 million (CHF 1.34 / EUR 0.84) for the same period last year.
Total backlog (excluding consignment stock agreements) on June 30, 2009 was EUR 35.1 million, up noticeably from EUR 30.6 million at the end of the first quarter (EUR 54.5 million on June 30, 2008). Cash and short-term investments totaled EUR 37.5 million on June 30, 2009. In addition, austriamicrosystems has further untapped credit lines available.
In austriamicrosystems’ communications business, demand patterns for its lighting management solutions and power management ICs remained subdued at two Top 5 handset manufacturers in the second quarter and first half. The corresponding run rates did not yet show meaningful signs of recovering to previous levels even though austriamicrosystems experienced certain stabilization effects towards the end of the first half. At a third Top 5 handset manufacturer, the company ramped up shipments of a lighting management solution for several models in the second quarter, albeit from a low base. MEMS microphone deliveries showed a recovery in shipments and together with a key partner austriamicrosystems retains its leading edge position in this attractive market. Despite the limited shipment demand from handset customers, development activities at these customers involving austriamicrosystems’ solutions continue at a strong pace.
In addition, austriamicrosystems introduced EasyPoint™, an innovative contactless joystick solution for mobile devices with significant cost and design advantages. EasyPoint™ is based on the company’s magnetic encoder technology and is already receiving strong attention from leading OEMs. Demonstrating its leading position in LED lighting management, austriamicrosystems started volume shipments of a LCD TV backlighting solution to a leading global OEM in the second quarter. The company also started shipping a multimedia solution to a new customer in the consumer electronics segment.
The industrial and medical business delivered mixed results in the second quarter and first half. The market environment for industrial automation and related applications continued to be weak with customer demand and order behavior strongly impacted by the worldwide economic downturn. As a consequence, austriamicrosystems expects this market segment to remain difficult for the remainder of 2009. The company nevertheless sees continuing design traction for its broad portfolio of magnetic encoders in a variety of innovative applications. austriamicrosystems’ medical business, on the other hand, showed a satisfactory performance in the second quarter and first half. austriamicrosystems was able to win global OEMs as important new customers for attractive mid-term projects which validates its world class expertise in high precision medical sensor interfaces.
The automotive market showed continued weakness with lower customer demand and irregular order patterns across the sector. austriamicrosystems expects this subdued situation to continue over the coming quarters as automotive OEMs and suppliers realign their businesses. The company nevertheless introduced a new fully automotive-specified encoder product to the market in the last quarter. austriamicrosystems’ foundry business contributed positively to its overall business again in the second quarter and first half despite lower revenues, given increased demand for higher value specialty processes compared to the previous year.
In operations, austriamicrosystems’ wafer fab and in-house test facilities continued to run at low utilization levels in the second quarter to reflect the reduced market demand. In combination with the high fixed cost nature of the company’s business this was the key factor driving the low gross margin recorded in the second quarter and the resulting operating and net loss. Lower production levels, at the same time, allowed inventories to be reduced in the second quarter. austriamicrosystems expects inventories to continue to decline in the coming quarters as a result of product demand increasing in comparison to production levels.
As part of its commitment to sustainable business practices, austriamicrosystems joined the UN Global Compact, a worldwide initiative calling for companies to promote, amongst others, the efficient use of energy and natural resources, fair labor practices, environmental excellence and good business conduct.
austriamicrosystems continues to operate in a difficult market environment with impaired visibility in several key markets. Despite this, austriamicrosystems sees a healthy improvement in its order intake which started towards the end of the second quarter and which we expect to continue. Based on available information, the company expects its business to show a significantly better performance in the third quarter and second half of 2009 compared to the first half. Consequently, austriamicrosystems expects operating results to show a strong improvement over the remaining quarters. At the same time, austriamicrosystems’ attractive product line-up and a growing list of design-wins at high quality customers position its business well for the future.