Elettronica
INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2012: STEADY QUARTER ON MORE DIFFICULT MARKETS
OKMETIC OYJ STOCK EXCHANGE RELEASE 24 OCTOBER 2012 AT 8.00 A.M.
INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2012: STEADY QUARTER ON MORE DIFFICULT MARKETS
Unless otherwise stated, figures in parenthesis refer to the corresponding period of the previous year.
JULY-SEPTEMBER IN BRIEF:
JANUARY-SEPTEMBER IN BRIEF:
PROJECTIONS FOR THE NEAR FUTURE
The growth estimates of customer industries for 2012 have been lowered during the summer and early autumn due to the increased uncertainty of the world economy.
The development of sensor wafer demand is estimated to be somewhat more stable than the demand for semiconductor wafers in the end of 2012.
The outlook for technology sales is burdened by the strongly lowered price level throughout the solar cell industry's value chain.
The company revised its guidance given in February 2012 with a stock exchange release published on 20 September 2012. Factors behind the revision of the outlook were the difficult market situation of the solar cell industry, the uncertain outlook of world economy and the operating profit deficit of early 2012, which, contrary to expectations, cannot be covered during the calendar year. The operating profit deficit was generated when a disturbance in the process of a supplier of gas, which is used in the manufacture of epi-coated wafers, caused a long shutdown at the Allen production facility in the US.
According to the revised guidance, the net sales in 2012 are estimated to settle approximately at the level of 2011. Operating profit is estimated to remain slightly under the level of 2011. According to the earlier guidance, Okmetic's net sales and operating profit were estimated to exceed the level of 2011.
PRESIDENT KAI SEIKKU:
" The positive development of the demand for silicon wafers which started in the second quarter continued in the third quarter, which raised the demand to the highest level of the year, as was anticipated. The shipment value of sensor wafers increased by 10.7 percent in the third quarter and the shipment value of semiconductor wafers by 21.2 percent compared to the corresponding period last year. Thanks to the third quarter, the shipment value of sensor wafers in January-September rose to the level of 2011 and the shipment value of semiconductor wafers in January-September exceeded the level of 2011 by five percent.
During the period under review, Okmetic performed better than the silicon wafer industry and the company's market share in product groups important to the company continued on a growth track of many years rising again to a record level in the third quarter. The fact that the semiconductor market's growth cycle of only few months saw a clear change already during the summer months is unusual but tells that customers are minimizing their inventory levels in the uncertain economic situation. Several customer indications predict that the markets will grow in early 2013, and therefore it seems that the slow demand marking the second half of the year remains short-term and does not affect the good long-term growth prospects of Okmetic's central customer areas.
Technology sales almost halved (down 49.2%) in July-September from the value of the comparison period. The long-term solar crystal shipment contracts terminated in July. The industry is in the middle of consolidation development. The strongly declined price level causes lowered profitability and uncertainty in demand. Even in the challenging times ahead, Okmetic aims to develop its competences and retain its market position in the industry which is assessed to be a growth area in the long run.
The operating profit remained at a good level of around 14 percent. Also the favourable development of the net cash flow from operations in the third quarter in relation to the corresponding period last year was positive. Compared to the strong third quarter in 2011, the operating profit in July-September was weighed down especially by technology business and epi-coated wafers, whose demand has decreased quickly due to market trends.
Okmetic will continue its investments in products the demand for which will grow faster than the average growth of the markets. The capacity extension of SOI wafers published in 2011 is proceeding according to plans. Furthermore, the company will increase its in-house silicon wafer production capacity in the coming years by eliminating productional bottlenecks at the Vantaa plant. At the same time, capabilities to manufacture new products and product groups, whose demand is growing, will be created.
In the last quarter of the year, the sensor and semiconductor wafer demand is estimated to be at a higher level than on the quiet comparison period last year although the market is slowing down in the end of the year due to seasonal changes and economic uncertainties. "
KEY FIGURES
MARKETS
Customer industries sensor, semiconductor, and solar cell industries
Sensor industry
In 2012, the sale value of sensor industry is estimated to grow 9-13 percent compared to the sale value of 2011 (8.6-10.2 billion US dollars). One of the fastest growing sectors is MEMS products for consumer applications such as microphones and gyroscopes. In the coming years auto-focus actuators, MEMS oscillators and MEMS switches are estimated to be significant growth areas in consumer applications . (IHS iSuppli, IC Insights, Yole)
Semiconductor industry
During the third quarter, the US dollar-based sales of the semiconductor industry have remained at the same level as in the second quarter of the year. Even though in the second and third quarter the dollar-based sales have been higher than in the first quarter, the growth forecasts for the whole year have been revised downwards. The estimates for the sale development in 2012 settle now at a level of -1 and +0.6 percent of annual growth (IHS iSuppli, IC Insights, Gartner, WSTS).
Solar cell industry
The volume growth in 2012 is predicted to level off considerably from the previous year's high level of around 40 percent. The overproduction of the industry is still significant, although some uncompetitive capacity has exited the market. (Solarbuzz)
The solar cell industry is undergoing a change towards a more stable market, where solar electricity will be produced competitively without government subsidies.
Silicon wafer market
According to the estimate published in October by SMG, the group of silicon wafer suppliers in SEMI (a global umbrella organisation for semiconductor materials and equipment industry) , the surface area of silicon wafer shipments calculated in square inches is estimated to grow by a percent in 2012 compared to 2011. The annual growth rate of the surface area is estimated to be six percent in 2013 and 2014.
Okmetic's central customer areas in the silicon wafer market
In line with its strategy, Okmetic seeks for special areas of the entire silicon wafer market that have greater growth rates than the market average and in which the company has special expertise. Okmetic supplies primarily 150mm and 200mm wafers. The sensor/MEMS industry is Okmetic's central growth area. The MEMS market grows as portable consumer products, automotive electronics, and industrial process control increase.
In the semiconductor market, Okmetic's growth areas include discrete and power semiconductors. The growth areas of these markets are i.a. components used in the production of renewable energy, increasing automotive electronics, portable consumer products, as well as different solutions related to power supply and efficiency improvement.
SALES
In January-September, Okmetic's net sales decreased by 4.1 (increased by 12.5) percent from the previous year amounting to 62.4 (65.1) million euro. The reason behind the decrease was the significant fall in the sales directed to the solar cell industry compared to the corresponding period last year. The strengthening of silicon wafer demand that began in the end of the first quarter continued still in the third quarter. The company's market share grew in the product groups which are important to the company, and t ypical to the industry, the sales were strong during the third quarter.
Sales per customer area
In January-September, the value of sensor wafer shipments was at the same level as last year. The demand for sensor wafers was strong in the third quarter, and the value of shipments increased by 10.7 percent compared to the corresponding period last year. The demand for sensor wafers is estimated to remain strong.
The strong demand for semiconductor wafers that started in the first quarter continued in the third quarter. In July-September, the value of shipments increased by 21.2 percent compared to the corresponding period last year. The value of shipments in January-September was 5.4 percent higher than in the corresponding period last year. The demand for semiconductor wafers is estimated to strengthen in the last quarter compared to the corresponding period last year.
In January-September, technology sales comprised mainly solar material sales. Due to the solar cell industry's market changes and the termination of Okmetic's long-term shipment contracts Okmetic's technology sales decreased by 26.3 percent in January-September compared to the corresponding period last year. In the third quarter, the sales decreased by 49.2 percent compared to the corresponding period last year. There is uncertainty related to the demand for technology sales in the near future caused by the industry's market trends. Due to the industry's overproduction the price levels have declined significantly during 2012.
Sales per market area
In January-September, the relative proportion of North America of the net sales strengthened. The relative proportion of Europe of the net sales strengthened in July-September.
PROFITABILITY
July-September
In July-September, Okmetic's operating profit was 3.0 (4.0) million euro. The operating profit accounted for 14.1 (19.0) percent of net sales. Profit for the period amounted to 2.1 (2.9) million euro. Basic earnings per share was 0.13 (0.18) euro.
January-September
In January-September, Okmetic's operating profit was 7.0 (9.5) million euro. The operating profit accounted for 11.2 (14.6) percent of net sales. Profit for the period amounted to 4.9 (8.2) million euro. P rofit for the comparison period was improved by the tax losses of the previous years. Basic earnings per share was 0.29 (0.49) euro.
FINANCING
The company's financial situation is good. In January-September, net cash flow from operations amounted to 5.9 (6.3) million euro.
On 30 September 2012, the company's interest-bearing liabilities amounted to 6.2 (1.0) million euro.
At the end of the period, cash and cash equivalents amounted to 6.9 (12.6) million euro. On 30 September 2012, the company's cash and cash equivalents exceeded the interest-bearing liabilities by 0.7 million euro (on 30 September 2011, cash and cash equivalents were 11.6 million euro higher than interest-bearing liabilities). The group has ensured the sufficiency of cash funds by a committed credit facility of 6.0 million euro. On 30 September 2012, 3.0 million euro of the credit facility was in use.
Return on equity amounted to 10.7 (18.4) percent and return on investment to 14.2 (19.5) percent. T he company's equity ratio was 72.8 (79.3) percent. Equity per share was 3.71 (3.69) euro.
INVESTMENTS
In January-September, Okmetic's capital expenditure amounted to 9.8 (7.5) million euro.
The investments concerned mainly the board's decision in April 2011 to in crease SOI wafer production capacity by extending the Vantaa plant. The around 30 million euro investment programme, to be implemented in 2011-2013, includes the plant extension and different kinds of production equipment. Building of the plant extension started in August 2011. The investment programme is proceeding according to plans.
PRODUCT DEVELOPMENT
In January-September, the company expensed 1.7 (1.7) million euro in product development projects. Product development costs accounted for 2.7 (2.7) percent of net sales. The product development costs have not been capitalised. Product development has been allocated to SOI wafers and high and low resistivity wafers.
PERSONNEL
On average, Okmetic employed 369 (365) people in January-September. At the end of the period, Okmetic employed 365 (350) people of which 322 worked in Finland, 38 in the US, four in Japan, and one in Hong Kong.
BUSINESS RISKS IN THE NEAR FUTURE
Despite the prolonged euro crisis there have been no significant changes in the company's near future business risks and uncertainties.
Okmetic's silicon wafer sales are targeted at the sensor and semiconductor producers in the electronics industry. The demand for semiconductor wafers is sensitive to economic fluctuations and changes in the market situation can be sudden and dramatic. The demand for sensor wafers is more stable. The proliferation of sensors in consumer electronics applications may, however, increase the susceptibility of this market too to economic fluctuations. Technology sales are solar material sales, which are predominantly affected by the economic situation of the solar cell industry.
Okmetic's share of the global silicon wafer market is around one percent and the market prices have a notable effect on the price development of Okmetic's products. The company only has considerable pricing power with its own special products. The pricing of other wafers is mainly based on global market price.
Okmetic operates globally, and therefore the company's business operations are affected by risks due to currency fluctuations, consisting of the cash flows of purchases and sales. A significant part of sales are conducted in US dollars. Despite hedging, the company remains exposed to exchange rate fluctuations.
Substantial volumes of electricity are used in Okmetic's production. Despite hedging, the company is exposed to fluctuations in the price of electricity.
The challenging global economic situation may create an increased liquidity risk for part of the customers.
The company's risks and uncertainty factors are dealt more profoundly in the company's annual report of 2011.
SHARES AND SHAREHOLDERS
On 30 September 2012, Okmetic Oyj's paid-up share capital, as entered in the Finnish Trade Register, was 11,821,250 euro. The number of shares was 17,287,500. The shares have no nominal value attached. Each share entitles its holder to one vote at general meetings. The company has one class of shares. The company's shares are included in the Finnish book-entry securities system.
SHARE PRICE DEVELOPMENT AND TRADING
A total of 2.8 (9.3) million shares were traded between 1 January and 30 September 2012, representing 16.1 (53.6) percent of the weighted average of share total of 17.3 (17.3) million during the period. The lowest quotation during the period was 4.21 (3.50) euro, and the highest 6.01 (6.65) euro, with the average being 5.34 (5.58) euro. The closing quotation for the period was 4.86 (4.67) euro. At the end of the period, the market capitalisation amounted to 84.0 (80.7) million euro.
DIVIDENDS PAID
In April 2012, the company distributed a dividend of 4.8 million euro of the profit accrued in 2011 (including dividends distributed for Okmetic Management Oy, a total of 0.1 million euro). The dividend was 0.28 euro per share.
In April 2011, the company distributed a dividend of 5.2 million euro of the profit accrued in 2010 (including dividends distributed for Okmetic Management Oy, a total of 0.1 million euro). The dividend was 0.30 euro per share.
In December 2011, the company distributed an additional dividend of 2.5 million euro (including dividends distributed for Okmetic Management Oy, a total of 0.1 million euro). The dividend was 0.15 euro per share.
OWN SHARES AND DIRECTED SHARE ISSUES
On 8 February 2012, Okmetic Oyj's board of directors announced of its decision to transfer a total of 56,033 own shares held by the company as a part of the company's share-based incentive scheme for the executive management group.
In line with the decisions of the annual general meeting and the board of directors, Okmetic Oyj transferred 13,597 shares to the board members as payment of the annual remuneration on 10 May 2012.
At the end of the period, the company held a total of 227,946 shares, which is approximately 1.3 percent of Okmetic's all shares and votes.
CONDENSED FINANCIAL STATEMENTS AND TABLES 1 JANUARY - 30 SEPTEMBER 2012 (unaudited)
ACCOUNTING POLICIES
These interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting.
In preparing these interim financial statements, Okmetic has followed the same accounting policies as in the financial statements for 2011 except for the effect of changes required by the adoption of the following new or revised standards and interpretations as of 1 January 2012:
-IFRS 7 (amendment), Financial instruments: Disclosures - Derecognition.
-IAS 12 (amendment), Income Taxes - Deferred Tax.
The adoption of the aforementioned standards and interpretations has not had an effect on the figures presented from the reporting period.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONDENSED CONSOLIDATED BALANCE SHEET
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
1)"Other reserves" contains hedge reserve and translation differences.
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
COMMITMENTS AND CONTINGENCIES
The contract price of the derivatives has been used as the nominal value of the underlying asset.
KEY FIGURES SHOWING FINANCIAL PERFORMANCE
KEY FIGURES PER SHARE
When calculating earnings per share (EPS) and equity, Okmetic's own shares in its possession and Okmetic's shares owned by Okmetic Management Oy are deducted from the amount of shares.
QUARTERLY KEY FIGURES
MAJOR SHAREHOLDERS ON 30 SEPTEMBER 2012
DEFINITIONS OF KEY FINANCIAL FIGURES
All figures of the financial tables are rounded, and consequently the sum of individual figures can deviate from the presented sum figure. The figures are unaudited.
The future estimates and forecasts in this interim report are based on the company management's current knowledge. Actual events and results may differ from the estimates presented here.
PRESS CONFERENCE
A press conference for the media and analysts will be held on Wednesday, 24 October 2012 at 8.30 a.m. at Helsinki World Trade Center, Aleksanterinkatu 17, fifth floor, Helsinki. The result will be presented by President Kai Seikku. The press conference will be held in Finnish.
OKMETIC OYJ
Board of directors
For further information, please contact:
President Kai Seikku, Okmetic Oyj,
tel. +358 400 200 288, email: kai.seikku@okmetic.com
Senior Vice President, Finance, IT, and Communications
Juha Jaatinen, Okmetic Oyj, tel. +358 9 5028 0286,
email: juha.jaatinen@okmetic.com
Distribution:
NASDAQ OMX Helsinki
Principal media
www.okmetic.com
OKMETIC IN BRIEF
Take it higher
Okmetic is a technology company which supplies tailor-made silicon wafers for sensor and semiconductor industries and sells its technological expertise to the solar cell industry. Okmetic provides its customers with solutions that boost their competitiveness and profitability.
Okmetic's silicon wafers are part of a further processing chain that produces end products that improve human interaction and quality of life. Okmetic's products are based on high-tech expertise that generates added value for customers, innovative product development and an extremely efficient production process.
Okmetic has a global customer base and sales network, production plants in Finland and the US and contract manufacturers in Japan and China. Okmetic's shares are listed on NASDAQ OMX Helsinki under the code OKM1V. For more information on the company, please visit our website at www.okmetic.com.
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