Elettronica
OKMETIC OYJ: INTERIM REPORT 1 JANUARY-30 JUNE 2013: DEMAND FOR SENSOR WAFERS AND DISCIPLINED COST MANAGEMENT GENERATED GOOD PROFITABILITY IN AN UNCERTAIN MARKET
OKMETIC OYJ STOCK EXCHANGE RELEASE 25 JULY 2013 AT 8.00 A.M.
INTERIM REPORT 1 JANUARY - 30 JUNE 2013: DEMAND FOR SENSOR WAFERS AND DISCIPLINED COST MANAGEMENT GENERATED GOOD PROFITABILITY IN AN UNCERTAIN MARKET
Unless otherwise stated, figures in parenthesis refer to the corresponding period in the previous year.
APRIL-JUNE IN BRIEF:
JANUARY-JUNE IN BRIEF:
SHORT-TERM OUTLOOK
In 2013, the semiconductor industry's demand is estimated to grow again, and the sensor industry is forecast to continue on its growth track. However, growth estimates for semiconductors have been revised downwards during the year due to the slowing PC market as well as weakening demand for smartphones.
The demand for sensor wafers manufactured by Okmetic is estimated to be fairly stable throughout 2013. Due to normal seasonal fluctuation, the demand for semiconductor wafers is slower in the early part of the year. After the slower-than-anticipated first half, the demand is likely to really pick up as late as in the third quarter.
Okmetic strives to outgrow the market in its core business as a manufacturer of demanding silicon wafers. Technology sales, instead, have contracted significantly as a result of the plummeted price level in the solar cell industry. This causes a structural change in the company's business. In 2013, the company's business will mainly consist of silicon wafer sales. However, the forecast growth of silicon wafer sales will not fully compensate for the steep decline in technology sales. Hence, the company's net sales will decrease in 2013. Technology sales are reported under the title Other business as of 1 January 2013 due to their diminished weight and varying content.
The company retains its existing guidance, according to which net sales and operating profit for 2013 are estimated to remain under the level of 2012.
PRESIDENT KAI SEIKKU:
"Okmetic's net sales grew only slightly from the first quarter. The sales in the company's key focus area, demanding sensor wafers, grew in the second quarter compared to both the beginning of the year and comparison period last year. Also the semiconductor wafer sales grew from the first quarter, but remained clearly below the level reached in the second quarter of last year. The market is slowed down by, among other things, the steeper-than-anticipated decline in demand for PCs, as well as weakening of the strongest growth in the smartphone market. Especially the Japanese market has been soft this year.
Technology sales reported under Other business were more than 6 million euro lower in the first half than during the comparison period in 2012. This anticipated change in the company's net sales split is due to the plummeted price level in solar cell industry. Also going forward, Okmetic will focus on high added value products, which enable the company to operate in line with its long-term profitability objectives.
Profitability remained at a good level despite the decline in net sales. Operating profit was 11.6 percent of net sales in the second quarter and reached the targeted 10 percent level also in the first half. As in previous years, Okmetic continues to outperform most of its competitors in the silicon wafer industry in terms of profitability. The fact that the total result of the industry is forecast to remain negative for the fifth year in a row this year illustrates the situation the industry finds itself in.
Okmetic's good profitability is based on several years of investments in sensor wafers and their commercialisation, as well as successful cost management. Also the epitaxial wafer production at the Allen plant, which was loss-making last year as well as in the beginning of this year, turned profitable in the second quarter.
Growth estimates for the silicon wafer market have been revised downwards during the year. Demand is estimated to be at its highest this year in the third quarter. The demand for sensor wafers looks solid, and the almost exceptionally quiet market for semiconductor wafers is expected to pick up in the latter half of the year."
KEY FIGURES
MARKETS
Customer industries sensor and semiconductor industry
Sensor industry
The sales value of sensor industry is estimated to grow 10-12 percent in 2013. In terms of volume, the sensor shipments are likely to clearly reach a new record this year. The increasing use of micro sensors in several consumer electronics products has positively influenced sensor sales. For the next few years, the sales value of sensor industry is estimated to grow 8-13 percent annually. (IHS, Yole)
Semiconductor industry
As anticipated, the US dollar based sales of the global semiconductor industry turned into growth in the second quarter of the year. Sales in May were 1.2% higher than in 2012 (SIA). Market growth is expected to continue in the second half of the year, and the annual growth rate for the year 2013 is estimated to end up at 3.5 to 5.0 percent (SIA, IC Insights, Gartner, IDC). Somewhat stronger growth is expected for the following years (5.1-7.7 %) (SIA, Gartner).
Silicon wafer market
According to the report of 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 in square inches grew in the second quarter of 2013 from the level in the beginning of the year. The estimated annual surface growth for 2013 is now around 2.5% (Gartner).
The key customer areas for Okmetic in the silicon wafer market
In line with its strategy, Okmetic seeks niches in the silicon wafer market that have greater growth than market average, and in which the company has special expertise. Okmetic supplies primarily 150mm and 200mm wafers. The sensor/MEMS industry is a key growth area for Okmetic. The MEMS market grows as portable consumer products, automotive electronics, and industrial process control increase.
In the semiconductor market, growth areas for Okmetic include discrete and power semiconductors. In these wafer markets, areas for growth include, among others, 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.
CHANGE IN SALES REPORTING PER CUSTOMER AREA
Okmetic has changed its sales reporting per customer area as of the beginning of 2013. According to the new policy, technology sales are reported under the title Other business because of their diminished weight and varying content.
SALES
In January-June, Okmetic's net sales amounted to 33.4 (41.4) million euro. There was a decrease of 19.2 percent (decrease of 5.5%) from the comparison period. The decrease in net sales was mainly due to a considerable decline in Other business sales already anticipated in the beginning of the year. Net sales in the second quarter grew only 3.9 percent from the first quarter, as the partially difficult market situation for semiconductor wafers still continued in April-June. Okmetic's market share remained stable in the product groups important to the company .
Sales per customer area
The demand for sensor wafers continued at a good level in January-June, and the value of shipments grew 7.1 percent from the corresponding period last year. The demand for sensor wafers is estimated to continue its steady growth during the whole year 2013.
In January-June, the semiconductor wafer shipments declined 17.4 percent from the strong comparison period last year. In the end of the reporting period the semiconductor industry sales finally started to pick up, and the demand for semiconductor wafers is estimated to clearly improve in the second half of the year.
The value of Other business shipments was 1.1 (7.4) million euro in January-June. The considerable difference is due to the loss of solar crystal sales.
Sales per market area
During the first half of the year, the demand was strongest in North America and Europe. The relative proportion of Asia of net sales considerably diminished in the reporting period. This was largely due to lower sales in Other business. Technology sales have been a considerable part of sales to Asia.
PROFITABILITY
April-June
In April-June, Okmetic's operating profit amounted to 2.0 (2.5) million euro, i.e. 11.6 (11.2) percent of net sales. Profit for the period amounted to 1.4 (2.1) million euro. Basic earnings per share was 0.08 (0.12) euro. Diluted earnings per share was 0.08 (0.12) euro.
January-June
In January-June, Okmetic's operating profit amounted to 3.3 (4.0) million euro, i.e. 10.0 (9.8) percent of net sales. Profit for the period amounted to 2.6 (2.8) million euro. Basic earnings per share was 0.15 (0.17) euro. Diluted earnings per share was 0.15 (0.16) euro.
FINANCING
The company's financial situation is solid. In January-June, net cash flow from operations amounted to 1.3 (1.7) million euro. The changes in working capital tied up in operations weakened cash flow from operations by 7.0 (3.7) million euro. The increase in working capital was mainly due to increased stock as the company prepared for the busiest season of the year. The reimbursement of income tax advances from 2012 improved net cash flow for the period by 1.1 million euro .
On 30 June 2012, the company's interest-bearing liabilities amounted to 12.8 (6.0) million euro.
Okmetic announced in January that it has signed a five-year loan agreement for 10 million euro. The loan is used for the earlier announced investments and general corporate purposes.
At the end of the reporting period, cash and cash equivalents amounted to 5.0 (6.0) million euro. On 30 June 2013, the company's cash and cash equivalents were 7.8 million euro lower than interest-bearing liabilities (on 30 June 2012, cash and cash equivalents were 0.1 million euro higher than interest-bearing liabilities). The group has ensured liquidity with committed credit facilities of 6.0 million euro. On 30 June 2013, the committed credit facilities were fully unused. ( On 30 June 2012, 3.0 million euro of the committed credit facilities was in use.)
Return on equity amounted to 8.4 (9.2) percent. T he company's equity ratio was 69.7 (73.2) percent. Equity per share was 3.63 (3.56) euro.
INVESTMENTS
In January-June, Okmetic's capital expenditure amounted to 4.1 (7.0) million euro. The investments were directed to debottlenecking and automatisation of wafer production lines as well as expansion of the Vantaa plant.
PRODUCT DEVELOPMENT
In January-June, the company expensed 1.2 (1.1) million euro in product development projects, corresponding to 3.5 (2.8) percent of net sales. Product development costs were not capitalised. Product development was directed to SOI wafers as well as high and low resistivity wafers.
PERSONNEL
On average, Okmetic employed 365 (364) people in January-June. At the end of the period, Okmetic had 379 (390) employees, of which 337 worked in Finland , 37 in the US, four in Japan, and one in Hong Kong.
CORPORATE GOVERNANCE
Okmetic Oyj's annual general meeting, which was held on 10 April 2013, adopted the annual accounts and the consolidated annual accounts for 2012 and discharged the company's management from liability. It was decided that a dividend of 0.25 euro per share would be distributed for 2012. The dividend was paid on Monday 22 April 2013. The annual general meeting decided also, in accordance with the proposal of the board of directors, to authorise the board to decide upon its discretion on the payment of a dividend, should the company's financial situation permit this. The additional dividend, including all possible separate decisions on dividend payment, may amount up to a maximum of 0.40 euro per share and 15,000,000 euro in total. Moreover, the general meeting approved the proposal of the board of directors to authorise the board to decide on the repurchase and/or the acceptance as pledge of the company's own shares as well as on the issuance of shares, the transfer of the company's own shares, and the issuance of special rights entitling to shares.
It was decided that there would be five members on the company's board of directors. Mr. Tapani Järvinen, Mr. Hannu Martola, Ms. Mervi Paulasto-Kröckel, Mr. Mikko Puolakka, and Mr. Henri Österlund were re-elected as members of the board of directors until the end of the next annual general meeting. The board of directors elected Henri Österlund as its chairman and Tapani Järvinen as its vice chairman in its organising meeting held immediately after the annual general meeting.
Authorised Public Accountant PricewaterhouseCoopers Oy was elected as auditor, with APA Mikko Nieminen having the principal responsibility.
Authorisations given to the board of directors and other decisions of the annual general meeting were disclosed in a stock exchange release published on 10 April 2013.
BUSINESS RISKS
There have been no significant changes in the company's near future business risks and uncertainties.
Okmetic's silicon wafer sales are directed to 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. Other business has in recent years been mainly crystal sales to the solar cell industry. Okmetic has existing polysilicon purchasing obligations partly until 2015. As the price level of the solar cell market has dropped, the validity of long-term polysilicon contracts typical of the industry may cause a price risk.
Okmetic's share of the global silicon wafer market is around one percent and the market prices have a notable effect on the pricing of Okmetic's products. The company has considerable pricing power only in its own special products. The pricing of other wafers is largely based on global market price.
Okmetic operates globally, and therefore the company's business operations are affected by risks related to exchange rate fluctuations, consisting of the cash flows of purchases and sales. A significant part of sales is 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.
SHARES AND SHAREHOLDERS
On 30 June 2013, 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 to one vote at general meetings. The company has one class of shares. The company's shares are included in the Finnish book-entry system.
SHARE PRICE PERFORMANCE AND TRADING
A total of 1.6 (2.0) million shares were traded between 1 January and 30 June 2013, representing 9.3 (11.8) percent of the weighted average of share total of 17.3 (17.3) million during the period. The lowest quotation during the period was 4.25 (4.21) euro, and the highest 5.15 (6.01) euro, with the average trading price being 4.67 (5.50) euro. The closing quotation for the period on 30 June 2013 was 4.70 (4.75) euro. At the end of the period, the market capitalisation amounted to 81.3 (82.1) million euro.
DIVIDENDS PAID
In April 2013, the company distributed a dividend of 4.3 million euro for the year 2012 (including dividends distributed to Okmetic Management Oy, a total of 0.1 million euro). The dividend was 0.25 euro per share.
NOTIFICATIONS OF CHANGES IN HOLDINGS
On 12 March 2013 the total holdings of Oy Ingman Finance Ab (Trade Register number 2241895-0) in the company rose to 5.03 percent.
OWN SHARES AND DIRECTED SHARE ISSUES
On 12 February 2013, Okmetic Oyj's board of directors announced its decision to transfer a total of 18,540 own shares held by the company as a part of the company's share-based incentive scheme for the executive management group.
According to the decisions of the annual general meeting and the board of directors, Okmetic Oyj transferred a total of 15,283 shares to the board members as payment of the annual remuneration on 10 May 2013.
At the end of the reporting period Okmetic held 194 123 (227 946) own shares, which corresponds to approximately 1.1 (1.3) percent of Okmetic's all shares and votes.
CONDENSED FINANCIAL STATEMENTS AND TABLES 1 JANUARY - 30 JUNE 2013 (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 2012 except for the effect of changes required by the adoption of certain new or revised standards and interpretations as of 1 January 2013, which have been described in financial statements 2012. The adoption of the new and revised 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.
HIERARCHY LEVELS OF DERIVATIVE CONTRACTS MEASURED AT FAIR VALUE
Fair value estimation
The group's financial instruments that are measured at fair value comprise derivatives used for hedging and held for trading, and they are classified on hierarchy level 2.
Fair values of level 2 instruments are based on other data than quoted prices in active markets, but on the data from which the asset is observable, either directly (i.e. price) or indirectly (i.e. derived from the prices).
Fair value determination
The fair values of currency derivatives are determined by using mark-to-market method at the reporting date.
The fair values of electricity derivatives are determined on the basis of market quotations and contract prices of the instruments at the reporting date.
KEY FIGURES SHOWING FINANCIAL PERFORMANCE
KEY FIGURES PER SHARE
QUARTERLY KEY FIGURES
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 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.
OKMETIC'S INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2013
Okmetic will publish its third quarter results on 24 October 2013.
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. 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.
Copyright Thomson Reuters
Attachment(s)
http://hugin.info/132025/R/1718486/571682.pdf
Regulatory News
This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.
Source: %s via Thomson Reuters ONE