Results for Third Quarter 2008/09: AT&S Achieves Operating Profits in First Three Quarters of 2008/09 Despite Restructuring Expenses

AT&S’s revenues in third quarter 2008/09 totalled €117.1 million, down 7.5% on the same period last year. In the first three quarters of financial 2008/09, revenues amounted to €351.4 million, 4.6% less than in the comparable period in 2007/08.

Gross profit for the third quarter of €20 million was 15.7% less than a year ago, and the first three quarters’ gross profit of €59.2 million was 12.5% down. The gross margin in the third quarter was 17.1% (2007/08: 18.8%), and in the first three quarters 16.8%, compared with 18.3% a year ago. Largely as a result of the restructuring of the Leoben-Hinterberg facility and the writedown of goodwill at AT&S Korea, which have depressed operating results by €25.8 million, the Group shows a negative EBIT of €18.2 million for the third quarter. EBIT for the same period last year came to €11.6 million, so that the EBIT margin declined from 9.2% last year to -15.6% in 2008/09. EBIT for the first nine months nonetheless reached €2.3 million, compared with €33.8 million for the same period last year. The EBIT margin dropped to 0.7% (Q1–3 2007/08: 9.2%).

Pretax losses for the third quarter amounted to €21 million, compared with profits of €13.2 million for the same period last year. For the first three quarters, pretax losses were €0.6 million, compared with pretax profits of €36.3 millioin a year ago. The writeoff of loss carryforwards at AT&S Korea increased taxes on income by €1.4 million in the quarter just ended. For the third quarter of the financial year there was a net loss (negative net income) of €23.5 million, as against a net profit of €11.7 million for Q3 2007/08. The net loss for the first nine months was €4.9 million, compared with net profits of €33.3 million a year ago.

AT&S’s net debt on 31 December 2008 amounted to €189.6 million (€157.7 million a year earlier), with net gearing at 78.8%. The increase in net borrowings of €33.3 million since 31 March 2008 is largely attributable to capital investment in further extension of the Shanghai plants, the construction of the new plant in India, payment of dividends and the low level of factoring activities. In the first quarter of financial 2008/09 AT&S placed a five-year €80 million bond, exchanging short-term for longer-term debt and improving its financial structure.

Outlook

For the printed circuit board industry worldwide, 2009 will be a challenging year – global sales are expected to fall by roughly 6.5%. In the light of the group’s healthy finances and market positioning, AT&S’s management expects the group to emerge as a winner from the market shakedown precipitated by the change in economic climate.

AT&S is not, however, currently prepared to give any guidance.

Notes to results for first three quarters of 2008/09

The past quarter was marked by the extreme harshness of the macro-economic environment, the restructuring of the Leoben-Hinterberg facility and writedowns at AT&S Korea. As a rule, November counts as one of the strongest months in AT&S’s financial year while, in December, demand falls off in anticipation of the impending holiday season. Reflecting the current economic situation, however, the third quarter of the current financial year showed orders dropping off as early as mid-November. This meant capacity under-utilisation in November rather than full capacity operation, with the trend worsening in December; high fixed costs mean that this impacts the group’s profitability.

Migration of volume orders to Asia has become progressively more noticeable in the last few years, and recently reached a level that made it necessary to make adjustments to capacity at AT&S’s Austrian facility in Leoben-Hinterberg. Production capacity, measured in surface area of printed circuit boards manufactured, was reduced from 215,000m² to 130,000m². In the course of the
restructuring process, 293 of AT&S’s own staff and 159 contract workers are being made redundant. The cost of these measures – amounting to €20.2 million – is disclosed in the income statement under non-recurring items.

AT&S Korea achieved a positive EBIT for the first time in October 2008, and its future development is viewed very positively. Its business plan has, however, had to be adapted to the global economic climate. This has meant a writedown of €5.6 million to goodwill, which is also disclosed in the income statement under non-recurring items. In addition, loss carryforwards amounting to €1.5 million were written off, resulting in a higher charge for taxes on income in the income statement.

The financial result was adversely affected by the increase in interest payments caused by the higher level of debt. Compared with last year, hedging gains were also considerably lower. The higher gearing ratio is attributable to capital investment in further extension of the Shanghai plants, the construction of the new plant in India, payment of dividends and the low level of factoring. Equity also decreased due to the impact of one-off effects, which were the cause of a consolidated loss in the third quarter.

Earnings per share (EPS) for the first three quarters were down to €-0.20, and in the third quarter came out at €-1.00. At 31 December 2008 AT&S employed 6,158 people. In the first three quarters Mobile Devices generated around 64% of revenues, with Industrial/Medical contributing some 22%, and Automotive customers roughly 10%. Services (assembly, trading and design) made up 3% of total revenues. Net capital investment in the first nine months of €47.1 million was largely for further expansion of Shanghai facilities and the construction of the second plant in India.

Share buy-back program

Since the beginning of the current financial year no further shares have been repurchased.

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