Elettronica
SOITEC : SOITEC ANNOUNCES HALF-YEAR RESULTS FOR 2013-2014
SOITEC ANNOUNCES HALF-YEAR RESULTS FOR 2013-2014
Bernin, France, November 20, 2013 - Soitec (Euronext), world leader in generating and manufacturing high performance semiconductor materials for electronics and energy, announced today its audited consolidated results for the first six months of its 2013-2014 financial year.
In the first half of the year, the Group posted consolidated sales of 91.0 million Euros, down 30.1% compared to the first six months of last year, taking into account an unfavorable 3.9% decrease in the dollar / euro exchange rate. The Group posted a current operating loss of 71.9 million Euros the first half of the year compared to a current operating loss of 70.2 million Euros in the first six months of last year. The Group continues with its Soitec 2015 program aimed at lowering its cost base. After write-down of assets, impairment charges, restructuring expenses and net financial expenses, the net first half year result (Group share) shows a loss of 159.9 million Euros against a loss of 132.3 million Euros in the first half of 2012-2013.
Operating cash flow was negative at 85.1 million Euros, mainly due to financing of Solar deliveries to its major project in South Africa (i.e. temporary working capital requirements of 37.2 million Euros).
The Group's cash available resources amounted to 117.0 million Euros at the end of September 2013 excluding restricted cash dedicated to its South African project which totaled 84.8 million Euros. The restricted cash shall be accessible as soon as 50% of the 44 MW capacity will be installed and connected. As of September 31, 2013 over 20 MW or 45% have been produced, shipped, erected and await testing and grid connection.
Financial highlights
*of which 51.3 million Euros for Electronic Segment and 5.0 million Euros for Solar Energy Segment
**of which 18.8 million Euros for Electronic Segment and 50.5 million Euros for Solar Energy Segment
Segment Analysis
Operating segments have been revised in a manner consistent with the new internal reporting provided to the Executive Team who are responsible for allocating resources and assessing performance. The Group now operates under three segments: Electronic, Solar Energy and Lighting. It has also elected to report corporate headquarters support functions within "Other segment".
Electronic Segment
On the back of the ongoing transition from PC to smartphone products, digital sales declined by 50.3% to 33.8 million Euros while RF and other small diameter sales declined slightly down by 4.1% at 51.9 million Euros. Reported gross margin came from 7.6 million Euros (6.0% of sales) in the first half 2012-2013 to 1.6 million Euros (1.8% of sales) in the first half 2013-2014 despite the sales decline and low current capacity utilization.
Net Research and Development efforts have been refocused on strategic programs (i.e. F2D and FD3D SOI) and benefited from higher funding. Net Research and development totaled 5.3 million Euros, or 5.9% of sales, compared to 13.2 million Euros for the first half-year of 2012-2013 or 10.5% of sales. Compared to first half last year, SG&A costs were reduced by 10% at 10.4 million Euros.
Current operating margin remains negative at 14.1 million Euros compared to a loss of 17.1 million Euros for the first half of last year. The Electronic Division has recently started to implement new cost cutting actions including workforce reduction on Bernin site with a cost saving target up to 17 million Euros. A one time charge for an amount of 18.8 million Euros for goodwill impairment, restructuring expenses and tool set writedown expenses has been booked.
Solar Energy Segment
The Solar division's financials include costs related to the production of almost 20 MW for the major South African project, but not the related sales and profits. Such recognition of sales and profits are pending the approval from Department of Energy.
R&D efforts dedicated to the development and commercialization of a next generation high efficiency solar cell started to pay back as Soitec recently announced a new world record in conversion efficiency of its proprietary four junction solar cell. After only over three years of research, Soitec reached a new record of 44.7% conversion efficiency.
The current operating loss increased from 40.0 million Euros to 50.6 million Euros. A total non current charge of 50.5 million Euros has been recorded relating to impairment, restructuring expenses and certain tool set write-off in Freiburg following the reorganization initiatives as part of the Soitec 2015 program.
Lighting Segment
The lighting segment was created last year as the R&D costs to support the Group's strategic positioning on Lighting markets became significant. Current efforts are focused on developing advanced substrates to address the future high growth market of solid state lighting.
Current operating loss decreased from 6.4 million Euros to 1.8 million Euros, which includes 3.9 million Euros in subsidies. Soitec has been awarded access to the BRIGHT Research and Development program supported by the French authority.
Other segment
The Other segment represents general corporate support functions.
Deliveries to major project in South Africa reached 45%.
In the first half-year, total negative EBITDA was 44.1 million Euros out of which Solar Energy division accounted to for 43.3 million Euros. The cash flow generated from operations was negative at an amount of 85.1 million Euros but included 37.2 million Euros allocated to working capital requirements for the South African project.
With strategic investments in its Solar Division now completed, net cash flow devoted to investment strongly decreased from 97.5 million Euros to 30.3 million Euros.
The Group had at its disposal at the end of September 2013 cash available resources amounting to 117.0 million Euros after successfully completing a capital increase and convertible refinancing. Restricted cash related to its South African project which totaled 84.8 million Euros shall be available when 50% of the 44 MW solar plant capacity will be installed and connected.
Net cash position stated at (200.8) million Euros compared to (66.6) million Euros end of March 2012. Restated from restricted cash and debt (i.e. CPV1 Listed Bond - 1 billion ZAR) related to its South African project Net cash position should be stated at (41.8) million Euros.
Positive momentum but conservative short-term outlook - almost flat sequential sales in H2 Electronic - first significant sales in Solar activities and cost cutting programs leave potential for upside in H2
In the Electronics sector, Soitec has devised SOI-based solutions which address both planar and non-planar designs for 20 nm nodes and below, these solutions have yet to be adopted on a large scale in order to offset the current trend observed for traditional digital 300mm SOI markets. ST Microelectronics' recent announcements concerning fully-depleted SOI-based design wins demonstrate the positive momentum for Soitec's technological solutions, but needs to translate into mass adoption by several other industry players in order to generate sufficient revenue for Soitec, directly or from royalties paid by its licensees. SOI supply chain has been significantly reinforced when Shin Etsu Handotai with whom Soitec renewed its license agreement has now been enlarged.
Considering the general economic uncertainty, the semiconductor industry is however cautious about accelerated adoption of new technologies. As a consequence, activity is anticipated to remain soft in the Electronics division in the coming quarters with visibility limited to the second half of the current financial year. This limited visibility for digital sales outlook will be partially offset by the strong continuous adoption of Soitec technologies for RF and mobility applications. Electronic sales for the second half of the 2013-2014 financial year are thus expected to be flat on a sequential basis.
In the second half, strong sequential growth guidance for solar revenue remains linked to the South African green-light from Department of Energy on change of control which will trigger revenue recognition. As already stated, failing which such green-light shall not allow to record sales revenue in H2. Based on current time line and potential shift in closing transactions, some contributions from other current projects could be postponed and are not totally secured to have a significant revenue contribution for the Solar Energy division until the end of the current fiscal year. The Group is carefully monitoring any specific milestones which could negatively impact the implementation of its PPAs or should not satisfy the ultimate commissioning dates attached to them.
Based on the anticipated growth from its Electronic and Solar Energy divisions and continuous cost cutting measures including the additional 17 million Euros of savings recently initiated by the Electronic division as well as further initiatives across all organizations the Group confirms it is on track to achieve Soitec 2015 objective to return to positive Ebit margin over 2015-2016 financial year.
The Group anticipates that its consolidated results for the full-year 2013-2014 will show EBIT margin remaining negative. Based on most updated forecast total available cash resources end of March 2014 should remain almost unchanged compared to its level end of September 2013. The group continues to pursue opportunities for increasing its liquidity position from asset monetization and additional credit lines.
Agenda
Half year management report shall be available on Soitec's web site on November 25 .
The sales for the third quarter of the 2013-2014 fiscal year will be published on January 20, 2014, after the closing of the Paris stock exchange.
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About Soitec
Soitec (Euronext Paris) is an international manufacturing company, at the heart of generating and manufacturing extreme performance semiconductor materials. Soitec's products encompass substrates for micro and nanoelectronics (most notably SOI : Silicon On Insulator) and concentrating photovoltaic systems (CPV), and company's core technologies Smart Cut(TM), Smart Stacking(TM) and Concentrix(TM), as well as expertise in epitaxy make it a world leader. Soitec delivers enhanced performance and energy efficiency to a broad range of applications including consumer and mobile electronics, telecommunications, automotive electronics, lighting products and solar power plants for large scale utilities. Soitec has manufacturing plants and Research and Development centers in France, Singapore, Germany, and the United States.
For more information, visit www.soitec.com .
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Consolidated financial statments for the 6 month period ended September 30, 2013
Consolidated income statement
Comprehensive income
Consolidated balance sheet
Statement of changes in equity
Statement of cash flows
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