First-half sales ahead of forecast
Jul 22, 2014
Zurich, July 22, 2014 - The worldwide automotive market performed well in the first half of 2014. Micronas, with its innovative Hall sensor and embedded controller products, benefited from the overall growth in sales and beat the revenue estimate it announced in April. Income, and therefore overall results, were negatively affected by the weakness of the yen and by temporary additional costs associated with the launch of new products on the 8-inch wafer line.
Consolidated net sales by the Micronas Group in the first half of 2014 increased to CHF 81.1 million, which is 7.4 percent higher than in the first half of 2013. The Company's gross margin for the first half of 2014 was 30.4 percent, compared with 30.2 percent in the first half of 2013. Operating profit (EBIT) came to CHF 3.3 million, or 4.1 percent of sales. Currency risk from yen-denominated sales was further reduced. During the first six months of the year 25 percent of sales to Japanese customers were invoiced in euros.
After the financial result and taxes, Micronas posted a profit of CHF 2.3 million for the first half of 2014. Earnings per share came to CHF 0.08. At end-June 2014 Micronas had cash, cash equivalents and short-term financial cash deposits of CHF 157.0 million. This is CHF 13.4 million lower than at the end of 2013, mainly because of the Company's higher investment in manufacturing facilities, including a new combined heat and power unit. During the first half of 2014, shareholders' equity fell by CHF 12.1 million from the end-2013 level to CHF 117.8 million owing to the adjustment of pension provisions to the lower interest rate levels. The equity ratio came to 39.3 percent.
"Micronas already offers the most comprehensive range of Hall sensors for automotive and industrial electronics," says Matthias Bopp, CEO of Micronas. "We enhanced our product portfolio in the first half of 2014 with a new generation of our established Hall switches and additional direct angle sensors."
The Automotive segment generated sales of CHF 75.6 million in the first half of 2014, which represents a rise of CHF 4.2 million, or 5.9 percent, on the first half of 2013. Operating profit (EBIT) came to CHF 3.2 million, or 4.2 percent of sales.
During the first six months of 2014, the worldwide automotive market, driven by China, the USA and Western Europe, registered positive growth compared with a year previously. There was a spike in sales in Japan in the first quarter prior to April's increase in the VAT rate. The increasing proportion of cars fitted with comfort and safety systems, and the related electrification of vehicles have led to greater complexity and increasing quality standards. This presents various challenges, which Micronas has addressed successfully. As a leading provider it supplies its worldwide customer base with high-quality Hall sensors e.g. for electronic throttle valves, electronic gas and brake pedals, electric power steering and clutch and gear controls.
The worldwide automotive industry is currently introducing the new ISO 26262 "Functional Safety" standard. At this year's Sensor+Test exhibition in Nuremberg, Micronas became the first company in the world to present a fully ISO 26262-compliant family of Hall switches in very small SOT23 packages for automotive applications. The HAL 15xy family is also notable for having the lowest power consumption on the market. Micronas developed its first Hall switch in 1993 and since then has supplied the car industry with more than 1.5 billion high-quality switches.
Micronas has further strengthened its excellent position in the market for Hall sensors with the announcement of the second generation of 3D HAL technology, which provides superior precision in measuring angles. This new family of direct angle sensors offers outstanding temperature stability, high resistance to air gap variations and magnet aging together with a wide range of diagnostic functions and effective protection circuitry. These 3D HAL sensors are used for measuring length as well as angles.
During the first six months of 2014, the Industrial segment achieved sales of CHF 5.5 million, which is 33.6 percent higher than in the first half of 2013. The segment made its first small operating profit of CHF 0.1 million during the first six months of 2014. This compares with EBIT of CHF -0.3 million a year previously.
Bernhard Huber, Vice President Sales, joined Micronas on April 1, 2014. Mr. Huber simultaneously took over management of and responsibility for the Industrial segment. He brings wide industrial experience and will help us grow the segment's sales of Hall sensors and embedded controllers.
Capacity utilization at the manufacturing facilities in Freiburg stood at around 85 percent in the first half-year. The highly efficient 8-inch wafer fab line produced runs of new products for the automotive and industrial markets alongside established products that have been in production for many years. The ongoing transition from the production of 150-mm (6-inch) wafers, which still dominates, to 200-mm (8-inch) production will in future allow much higher efficiency as well as an expansion in capacity in the existing clean-room areas.
The construction of the combined heat and power unit initiated last year progressed well. The unit, which became operational on schedule in July 2014 and which includes two redundant modules, can cover more than 30 percent of the Company's electricity requirements. Full use of the waste heat and cooling throughout the year directly on-site will allow the system to run at more than 90 percent efficiency, thus also contributing to security of supply.
Günter Hoppe, Chief Financial Officer of Micronas Group, is retiring after more than 17 years at the Company. We would like to thank Mr. Hoppe for his outstanding work and his many years of loyal dedication to Micronas. His successor, Daniel Wäger, will take up his role as Micronas Group's CFO on September 15, 2014. Mr. Wäger, 50, was previously Chief Financial Officer of Wärtsilä Switzerland Ltd. With his international experience he will make a very good addition to our management team.
Strong car sales in Japan and a restocking of inventories by our customers had a positive effect on sales in the first six months. Against this background, and based on the current yen-euro exchange rate, the Board of Directors and Management expect to see sales of around CHF 158 million for 2014 as a whole. The continuing weakness of the Japanese yen and the additional start-up costs for new products on the 8-inch line will continue to affect the Company's results in the second half of the year, so the EBIT margin is expected to remain in the lower single-digit percentage range.
Micronas (SIX Swiss Exchange: MASN) is known and recognized in the automotive and industrial business as a reliable global partner for intelligent, sensor-based system solutions. Micronas offers a variety of Hall sensors and embedded controllers for smart actuators for automotive and industrial applications, such as drive trains, chassis frames, engine management and convenience functions.