EANS-News: AT & S Austria Technologie und Systemtechnik Aktiengesellschaft / First half of 2016/17: AT&S with stable development in the core business, earnings still influenced by start-up eff

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quarterly report/6-month report

* Good customer demand and capacity utilisation - especially in the
second quarter of 2016/17 * Revenue close to the strong level of
the previous year - despite stronger seasonality in the first
quarter 2016/17 * Start-up effects from the new plants in Chongqing
influence earnings * Ramp-up of plant 1 in Chongqing still flatter
than expected due to necessary process optimisations; effects of
delay included in the adjusted guidance

AT&S, one of the global technology leaders for high-end printed
circuit boards, recorded a stable development in the core business in
the first six months of the financial year compared with the first
half of the previous year, with start-up effects from the new plants
in Chongqing, China.

Andreas Gerstenmayer, CEO of AT&S, commented: "We showed a stable
development in the core business in the first half of 2016/17 and
profitability is still high. In relation to the very high prior-year
level, we came close to matching the level of last year despite
stronger seasonality in the first quarter and higher price pressure.
Customer demand is very good at present: We could take in
significantly more orders if we had more capacity. However, the new
plants in Chongqing still have an impact on our results in the
ramp-up phase, and the start-up curve for IC substrates is still
flatter. Because of that and the fact that we have to temporarily
reduce capacity at our existing plant in Shanghai due to the adaption
to a new technology, we had to adjust our outlook for the year as
part of the quarterly forecasting process. We still see growing
markets in all customer segments, but as a result of these factors,
we expect slightly slower growth and lower profitability than
originally assumed."

Asset, financial and earnings position AT&S matched the strong
revenue figures of the previous year in the first half of 2016/17. At
EUR 386.5 million, revenue maintained the high level of EUR 387.1
million in the previous year. First revenues from IC substrates
nearly fully compensated the stronger seasonality in the first
quarter in the Mobile Devices & Substrates segment.

Based on the start-up effects for the Chongqing project (EUR 37.3
million), EBITDA declined by EUR 41.1 million or -44.1% from EUR 93.2
million to EUR 52.1 million in the first half of the year. Adjusted
for these start-up effects, EBITDA amounted to EUR 89.4 million, down
4.6% on the high level of the previous year. This slight decline
results from a price/product mix effect in the Mobile Devices &
Substrates segment and could not be fully compensated even though
cost-saving measures were implemented.

The EBITDA margin was 13.5% in the first half of the year and thus -
10.6 percentage points below the very high level of 24.1% in the
previous year. Adjusted for the Chongqing project, the margin of
23.8% nearly matches the high, adjusted prior-year level of 24.3%. In
the core business, AT&S maintained its relative profitability stable
at the very high prior-year level despite the challenging market
environment.

Depreciation of property, plant and equipment and amortisation of
intangible assets amounted to EUR 57.9 million (prior-year period:
EUR 42.5 million). This higher depreciation and amortisation, which
is predominantly related to the Chongqing project, reduced EBIT by
EUR 56.5 million to EUR -5.8 million. Adjusted for the Chongqing
project, EBIT totalled EUR 51.7 million, down EUR 3.7 million on the
adjusted prior-year value. The EBIT margin amounted to -1.5%
(prior-year period: 13.1%). The adjusted margin was 13.8% and thus
-0.6 percentage points below the adjusted prior-year level of 14.4%.

Finance costs dropped significantly from EUR 0.0 million in the
prior-year period to EUR -10.0 million, which was among other things
due to negative currency effects and a higher net interest result.
The tax rate amounted to 6.5%.

The profit for the period fell by EUR -56.9 million from EUR 42.1
million in the prior-year period to EUR -14.8 million due to the
start-up effects of the Chongqing project and significantly higher
negative finance costs. As a result, earnings per share declined from
EUR 1.08 in the prior-year period to EUR -0.38.

Cash flow and statement of financial position Cash flows from
operating activities before changes in working capital amounted to
EUR 36.9 million vs. EUR 85.4 million in the previous year. Cash flow
from investing activities - investments in the plants under
construction in Chongqing, technology investments in other locations
and investments in financial assets - totalled EUR -155.1 million
(prior-year period: EUR - 97.5 million).

Equity decreased from EUR 568.9 million to EUR 531.9 million due to
the loss for the period, the dividend paid of EUR 14.0 million and
negative currency differences of EUR 8.2 million. The resulting
equity ratio, at 36.4%, was -5.9 percentage points lower than at 31
March 2016 as expected, also because of the increase in total assets.

Net debt rose by EUR 176.0 million from EUR 263.2 million at 31 March
2016 to EUR 439.2 million. This expected increase resulted from the
high investment activities and the increase in working capital, which
cannot be financed from the operating result. Consequently, the net
gearing ratio, at 82.6% at 30 September 2016, was substantially
higher than at 31 March 2016 (46.3%).

Key financials:

According to IFRS; H1 2015/16 H1 2016/17 Change
in EUR million 01.04.-30.09.2015 01.04.-30.09.2016
Revenue 387.1 386.5 -0.2%
EBITDA 93.2 52.1 -44.1%
EBITDA margin (in 24.1 13.5 -
%)
EBITDA adjusted1) 93.7 89.4 -4.6%
EBITDA margin 24.3 23.8 -
adjusted (in %)1)
EBIT 50.7 -5.8 > -100%
EBIT margin (in %) 13.1 -1.5 -
EBIT adjusted1) 55.4 51.7 -6.7%
EBIT marginadjusted 14.4 13.8 -
(in %)1)
Profit/loss for the 42.1 -14.8 > -100%
year
Cash flows from 85.4 36.9 > -100%
operating
activities before
changes in working
capital
Net CAPEX 98.2 142.5 45.1%
Equity ratio 42.3 % 36.4 % -
Net debt 263.3 439.2 66.9%
Earnings per 1.08 -0.38 > -100%
average number of
shares outstanding
(in EUR)

1) Adjusted for the Chongqing project

Segment Mobile Devices & Substrates with stronger seasonality, earnings
influenced by Chongqing start-up effects

Demand for high-end printed circuit boards for mobile devices was
good in the first half of the year; however, it was characterised by
considerably stronger seasonality in the first quarter in comparison
with the prior-year period. Revenue from IC substrates compensated
this development, but this segment recorded negative currency
effects. Revenue therefore amounted to EUR 269.7 million in the first
half of 2016/17, down -1.1% on the prior-year figure. EBITDA was
significantly influenced by start-up effects from the new plants in
Chongqing and therefore decreased by EUR 43.1 million or -63.8% to
EUR 24.5 million in comparison with the prior-year period. Adjusted
for the Chongqing effect, EBITDA amounted to EUR 58.5 million,
resulting in an adjusted EBITDA margin of 22.7%, which is lower than
the adjusted prior-year value of 25.3%. This is attributable to price
and product mix effects.

Automotive, Industrial, Medical segment with increases in revenue and
earnings With revenue growth of 2.9%, this segment increased the
prior-year figure from EUR 169.5 million to EUR 174.4 million. The
main drivers were continued strong revenue from high-end printed
circuit boards in the Automotive segment, which reflect the trend
towards more electronic components in cars, and very strong growing
revenue in the Medical sector. Revenue in the Industrial sector
remained at the high level of the previous year. EBITDA rose by 19.9%
from EUR 19.2 million to EUR 23.0 million. With an increase by 1.9
percentage points from 11.3% to 13.2%, the EBITDA margin clearly
exceeded the prior-year level. Adjusted for the segment's share in
the start-up effects of the Chongqing project, EBITDA amounts to EUR
26.3 million and the adjusted EBITDA margin to 15.4% (prior-year
period, adjusted: 11.0 %). The segment also benefited from the
reversal of a provision for unused space as this space is now used
again.

Status Chongqing: still flatter ramp-up phase in plant 1 for IC
substrates, ramp plant 2 for substrate-like printed circuit boards is
proceeding well As at 30 September 2016, AT&S invested EUR 392.9
million in the Chongqing project. However, the optimisation of the
highly complex production facilities for IC substrates is still
causing a flatter ramp-up. The production line is running at full
capacity, but the volume output and yield are not yet satisfactory.
The effects resulting from this delay were taken into account in the
adjusted guidance for the year. The ramp-up for the first production
line for substrate-like printed circuit boards is proceeding well.

Investment in new technology generation at the Shanghai plant Based
on customer demand, AT&S is preparing the new technology generation
in the core business for the Mobile Devices & Substrates segment at
the Shanghai plant earlier than originally planned. Serial production
of this technology is scheduled to start at the beginning of the
second half of the calendar year 2017. The resulting technological
adaptations of the production facilities cause a temporary capacity
reduction at the Shanghai plant. With this technology, AT&S positions
itself as a high-end supplier in continuously growing customer
segments.

Outlook for the financial year 2016/17 adjusted Provided that the
macroeconomic environment remains stable, the USD-EUR currency
relation stays at a similar level as in the past financial year
2015/16 and demand is stable in the core business, AT&S expects an
increase in revenue of 4-6% for the financial year 2016/17. The
EBITDA margin should range between 15- 16% primarily due to the
start-up effects in Chongqing. However, the EBITDA margin in the core
business should be at a similar level as in the financial year
2015/16. Higher depreciation and amortisation of an additional
approx. EUR 40 million for the Chongqing project in the financial
year 2016/17 will have a significant influence on EBIT.

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Further inquiry note:
Elke Koch, Director Investor Relations & Communications
Tel: +43 3842 200-5925; Mobil: +43 676 8955 5925; e.koch@ats.net

Marina Konrad, Head of Corporate Communications
Tel: +43 3842 200-5423; Mobil: +43 676 8955 5423; m.konrad@ats.net

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company: AT & S Austria Technologie und Systemtechnik Aktiengesellschaft
Fabriksgasse 13
A-8700 Leoben
phone: 03842 200-0
mail: info@ats.net
WWW: www.ats.net
sector: Technology
ISIN: AT0000969985
indexes: WBI, Prime Market, VÖNIX, ATX GP
stockmarkets: official market: Wien
language: English

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