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Aixtron Hits 2016 Targets

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Positive net income in Q4 but negative for the year due to high R&D costs
Deposition equipment firm Aixtron has announced its financial results for fiscal year 2016 and Q4 2016.

Following a strong second half, Aixtron met its guidance published at the beginning of the year. At €196.5 million, total revenues for 2016 virtually matched the previous year’s figure (2015: €197.8m), while Q4/2016 revenues came to €89.8m (Q3/2016: €51.2m). This figure, which represents the highest quarterly revenues since 2011, was due to a high volume of planned system shipments.

The largest contributions came from production systems for LED, telecom and optoelectronics, as well as for the silicon industry.


EBITDA in 2016 rose year-on-year by 52 percent (2016: -€7.9m; 2015: -€-6.4m). This development was driven by the strong fourth quarter of 2016 (Q4/2016: €12.5m; Q3/2016: €-0.4m) for which a positive EBIT and net result of €7.9m and €6.4m respectively were also posted. As expected, overall EBITDA in H2/2016 came in positive at €12.1m.

The free cash flow of -€42.9m in 2016 improved by €14.4m, or 25 percent, on the previous year (2015: -€57.3m). The negative free cash flow of €-4.9m in Q4 of 2016 (Q3/2016: €3.0m) was mainly due to high shipment volumes at the end of the year. A large part of the resultant increase in outstanding receivables has converted into cash in Q1/2017.

Total order intake in 2016 came to €225.1m, 35 percent higher than in the previous year (2015: €167.1m) and the highest figure in five years. In Q4/2016, total order intake of €60.5m was slightly down on the previous quarter but significantly higher than in the previous year (Q3/2016: €69.0m, Q4/2015: €31.3m). This was due to consistently high demand for LED, telecom and optoelectronic applications, including the sale of AIX R6 inventories.

As of December 31, 2016, the equipment order backlog totaled €78.1m, a 67 percent increase on the figure of €46.7m at the beginning of the year (December 31, 2015: €42.9m; September 30, 2016: €104.0m).

Management Review

"The dominant topic in fiscal year 2016 was the planned takeover by Grand Chip Investment, which was intended to secure the company’s access to the major Chinese market while also ensuring that all of Aixtron’s product portfolio could be brought to market maturity, " comments Martin Goetzeler, CEO of Aixtron SE.

“Following the US President’s order prohibiting the bidder’s acquisition of Aixtron’s US business and the investor’s subsequent withdrawal, Aixtron acted to realign its corporate strategy targeting a sustainable return to profitability and to report a positive EBIT for full year 2018. Now it is a matter of implementing this strategy", he added.

He continued: “Operationally, we made major progress in numerous areas in fiscal year 2016 and met the financial targets communicated at the beginning of the year. The strong performance in the second half, and especially in the fourth quarter of 2016, enabled us to further improve the company’s full-year results, even if we did not yet return to profitability due to ongoing high research and development costs.

“It was important that we continued to press ahead with diversifying our technology and product portfolio last year. That is also one of the reasons why, based on our own calculations, we were once again the global market leader for MOCVD systems in 2016.

“The strong reported equipment order backlog gives us reason to be confident in our outlook for 2017, in particular with regard to opto- and power electronics as well as to the silicon business. We took a decisive step forward by supplying a Beta system with Gen1 (200 x 200 mm) configurations to a major display manufacturer to demonstrate our production processes on site. This way, we have moved significantly closer to obtaining the first order initially targeted for 2016.

“With the strategy it has taken, the innovative products it can offer to numerous key markets of the future, the processes and structures it has put in place in recent years, and its clear results focus, Aixtron is on the road towards sustainable profitability," he concluded

Guidance

Following the termination of the planned takeover transaction by a Chinese investor in December 2016, Aixtron is now focusing on the optimal structure of its technology portfolio as part of its corporate strategy. Against this background, Aixtron is currently pursuing different options in order to successfully reduce required upfront expenses for the development of future technologies.

These options include looking for partners, joint ventures or other alternatives. All these measures are targeted to enable a sustainable return to profitability and to report a positive EBIT for full year 2018.

Based on the existing business structure and the assessment on Aixtron’s current order situation, management expects for fiscal year 2017 to achieve revenues and an order intake between €180 million and 210 million.

Due to planned additional upfront expenses for development of future technologies and based on the existing structure, Aixtron expects to achieve lower EBITDA, EBIT and net result for fiscal year 2017.

Aixtron is pursuing the options mentioned above in order to return to sustainable profitability. Management will provide an update on the 2017 earnings outlook as the above mentioned plans materialise.

Influenced by the significant reimbursement of an advance payment in Q1/2016 which will not repeat,it expects a further improvement of the free cash flow in 2017.


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