siltronic continues to increase the value for its stakeholders sentation... · pdf...

© Siltronic AG 2017

Siltronic continues to increase the value for its

stakeholders

Rainer Irle

CFO

September 21, 2017


FINANCIALS

…price increases

accelerate continuous

improvement …….

Capital Markets Day

September 2017 3 © Siltronic AG 2017 Siltronic continues to increase the value for its stakeholders

221 230

237 246

258

283

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

Q2 sales development driven by increased prices and slightly

higher wafer volumes

Sales, in EUR million +9.7%

Comments

Positive

Slight volume growth q-o-q,

especially in smaller

diameters

Higher wafer prices for

300mm and 200mm in Q2

ASP up y-o-y and q-o-q

Further price increases

negotiated for Q3

Negative

Some headwind from USD

q-o-q

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Positive development of EBITDA and EBITDA margin mainly due

to higher ASP

24

35 37

51 53

73

2121

1615

11

26

Q3 2016 Q2 2016 Q1 2016 Q2 2017 Q4 2016 Q1 2017

EBITDA margin in %; EBITDA, in EUR million Comments

Positive

Higher ASP y-o-y and

q-o-q

Successful cost reduction

program continued – cost

of sales per wafer area

decreased

Capital Markets Day


Net result for the period, in EUR million Comments

Interest expense about EUR

10m per year (mostly pension

related)

Potential future tax

advantages based on tax

losses carried forward not

capitalized (accounting

policies)

Current tax rate below 20%

Net result continuous to improve

35

1716

4

-12

Q2 2017 Q1 2016

1

Q4 2016 Q3 2016 Q2 2016 Q1 2017

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Capex and FCF, in EUR million Comments

Repayment of customer

prepayments about EUR 5m

per quarter

Received new prepayment of

EUR 15m in H1/2017

Increasing free cash flow generation

-7

16 10

31 42

20 22 22

24

19

26

Q2 2017 Q1 2017 Q3 2016 Q2 2016

0

Q1 2016 Q4 2016

FCF

Capex

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Equity ratio of 46.9%

Net financial assets of EUR 241.2m

Assets Jun 30,

2017

Dec 31,

2016

Comments

Jun 30, 2017

Non-current 532 554

PP&E 498 520

Other fixed 34 34 25 intangibles

(related to SSW)

3 hedging

Current 581 503

Inventories 140 141

Trade

receivables 131 118

Other current 29 28

12 hedging

Cash and fixed

term deposits 281 215

Total 1,113 1,057

Equity and

liabilities

Jun 30,

2017

Dec 31,

2016

Comments

Jun 30, 2017

Equity 522 425

Siltronic 527 432

Other

shareholders -5 -7

Samsung’s 22% in

SSW

Liabilities 591 632

Pension

provision 345 395 Germany and US

Other provisions 56 51 42 personnel related

(e.g. early

retirement)

Financial debt 40 40 Samsung

Trade liabilities 79 82

Other 71 64 30 prepayments

35 employee-related

1 hedging

Total 1,113 1,057

Balance sheet, in EUR million

Capital Markets Day


379

473 496

395 371

345

Q1 2016 Q2 Q3 Q4 Q1 2017 Q2

Fluctuations in pension provision due to interest rate

movements

interest rates IFRS

USA

Germany

Pension provision, in EUR million

Comments

Changes in interest rates

influence evaluation of

pension provision

Changes in interest rates

directly reflected in equity

(OCI)

In reality, nothing changed

3.78%

2.15%

3.47%

1.60%

3.43%

1.38%

3.92%

1.94% 2.07%

3.90%

2.19%

3.65%


SILTRONIC - STAND ALONE

……Wacker remains to be a

strategic partner…..

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WACKER remains to be Siltronic‘s top supplier

WACKER supply to Siltronic in 2016

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Strategic supply of high-quality polysilicon at competitive cost

11

Close collaboration with WACKER to optimize polysilicon supply

Continuously improving process yields

Long-term contract for majority of raw material needs until at least 2019

Security of supply in product quality and price competitiveness

Second source poly supply qualified and used

Global provider of… #1 …high-quality silicon for electronic applications


DIGITALIZATION &

INDUSTRY 4.0

…provides the potential to

further improve productivity

and capabilities while

creating demand for the

industry…..

Capital Markets Day


Manufacturing will embrace new technologies to reach productivity

gains, improve quality performance and prevent human errors

Wearables will eliminate

the distance between

equipment and PC and

save walking miles

VR glasses to

communicate between

shop floor and experts

anytime - anywhere

AI will take over

tuning of pullers + reactors

reading & understanding

of SPC charts

Wafers will know if

they are at risk

to break

A range of Siltronic activities relating to digitalization and Industry 4.0

https://www.google.de/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiX-fWInJjVAhWPPFAKHZcdBsAQjRwIBw&url=https://www.tomsguide.com/us/google-glass-2-enterprise-edition-faq,news-25490.html&psig=AFQjCNE5klNazcGa7t2qqdNxNiGU8SCyIQ&ust=1500652422779734

Capital Markets Day


A number of Siltronic current activities relating to Industry 4.0

Video-based learning

Smart glasses or holo lense

Data mining

Simulation

Automation

APC

(real-time)

Capital Markets Day


Advanced materials require a new line-

oriented APC scenario

Focuses on the process and takes the

feedback from following processes into

account.

The process target depends on the

optimum input conditions for following

processes and the end of line target.

Interaction between processes is included.

Example Fab 300-2: 10.000 trace

parameter values per sec.

New advanced process control scenarios include process

interactions

meas.

meas.

meas.

meas.


STAKEHOLDERS‘ BENEFITS

…shareholders to benefit

from improved financials…..

Capital Markets Day


0%

50%

100%

150%

200%

250%

300%

350%

Siltronic GlobalWafers Sumco

Share price 11th of June 2015 = 100%

Source: Bloomberg, 18th September 2017

IPO Siltronic, 11th of

June 2015

(€30 = 100%)

11th of Feb. 2016

EUR 12.30

18th of Sept. 2017

EUR 93.75

Siltronic share price more than tripled since IPO

2015 2016 2017

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A disciplined approach to capital budgeting – priority is to

support and secure our business

Selective investment in our business

1. Capability improvement

2. Cost reduction

3. Debottlenecking and extensions

Shareholder remuneration (dividends)

Further strengthening our balance sheet

1. High cash position in semiconductors needed

2. Flexibility to quickly execute potential future

strategic options

Continuously

Strongly

improved

First dividend

to be paid in

2018

Capital budgeting priorities

Capital Markets Day


Net financial assets expected to be > EUR 300m by end of 2017

(~ doubled since IPO)

Basic conditions Siltronic

2017: Free cash flow = net earnings

very strong free cash flow

typical TecDAX FCF ~ 0,5 x earnings

Main reasons:

No acquisitions

No capitalisation of deferred taxes

Strong EBITDA margin

Depreciation > Capex

241

175

156

RF

31.12.2017

31.12.2016 Q2 2017 31.12.2015

>300

Net financial assets, in EUR million

Capital Markets Day


Dividend payment possible:

High free cash flow

Substantial net earnings

Significant net cash

Share buy-back not reasonable at

current share price

Continuous positive cash flow and

further increase of net financial assets

expected

High free cash flow opens opportunity to pay a dividend for 2017 –

comparable companies are limiting their payments

Limiting factors regarding dividend:

Reserve of EUR 100mn for a potential

acquisition of Samsung stake in SSW

Semiconductor companies tend to have

a high liquidity reserve

Reserve for a potential share buy-back

program in case of reduced trading

prices

Reserve to quickly execute strategic

options in case of upcoming

opportunities

Capital Markets Day


Share of entities paying a dividend in

2016, in %

60% of entities listed in the TecDax paid a dividend in 2016

If dividend paid - % of earnings paid in

2016

TecDax SOX

53%

92%

SDAX

70%

MDAX

63%

>100% >100%

34% 41%

55% 58%

29% 25%

TecDax SOX

max.

min.

3. quartile

1. quartile

median

12% 11%

Capital Markets Day


Dividend guidance:

Pay-out ratio of ~40% of net shareholder earnings based on IFRS standards

2017 – EUR 2.00 – 2.50 per share expected (pay-out in 2018)

Depending on approval of Shareholders Meeting in April 2018

With an estimated EUR 150m capex and EUR 60 - 75m dividend, liquidity expected to

increase further

Shareholders to benefit from good cash flow and profit

improvement – Siltronic introduced a dividend policy


OUTLOOK

……a positive outlook in

H2/2017 and beyond…..

Capital Markets Day

September 2017 24 Siltronic continues to increase the value for its stakeholders @Siltronic AG 2017

Siltronic Outlook 2017 (Update as of July 28, 2017)

Depreciation on the level of 2016

Free cash flow clearly positive; by far above 2016

Sales at least EUR 1.12bn

R&D unchanged at approx. 7% of sales

Cost position potential savings of around EUR 15m to EUR 20m

Hedging expenses substantially lower around EUR 10m

EBITDA margin at least 27%

ROCE substantially higher than in 2016, considerably higher than WACC

Tax rate 20% or slightly below

Financial result roughly EUR 10m interest expense

Earnings per share significantly higher than in 2016

CapEx around EUR 100m, partly financed by USD 20mn customer prepayments

Capital Markets Day


EBITDA margin will significantly increase in H2

283

258

26

21

Q4 2017 Q1 2017 Q3 2017 Q2 2017

EBITDA

Revenue 23% EBITDA in H1

at least 27% for the year

> 30% in H2

after Q2, 100% of additional price

increases will flow through to bottom

line

EBITDA margin, in %; revenue, in EUR million

Capital Markets Day


Depreciation will come down to EUR 100m and capex will be

higher than depreciation

(1) The adjustments relate to the years 2012-2014 and are based on the assumption that SSW would have been consolidated prior to January 1, 2012. Initial consolidation of SSW into the consolidated

financial statements was made as of 24th of January 2014.

150

89

75

4140

144

100

119121

200198

2014

149

2013 2015

95 -100

2018 2017

115-120

2016 2012

Depreciation

Capex

Adjusted1 capex; adjusted depreciation, in EUR million

Capital Markets Day


Actual tax rate will increase after tax loss carried forward used up

2017 2018 2019

statuatory 28% 28% 28%

actual 10% ~20% 28%

statuatory 38% 38% 38%

actual

200mm 17% 17% 17%

300mm 0% 0% 0%

Total ~15% ~20% ~25%

Germany

USA

Singapore

32% 32% 32%

Tax rates

Capital Markets Day


With higher prices / revenue, we also see an increased FX

exposure

Revenue and cost by currency in 2017

Cash

Cost

Revenue

100%

USD

JPY

EUR

SGD

1ct change USD / EUR

sales ± EUR 7m

EBITDA ± EUR 5m (unhedged)

50% hedging ratio

average 2016: 1.11 USD / EUR

currently close to: 1.20 USD / EUR

Capital Markets Day


Strong USD good for industry, strong JPY good for Siltronic

± EBITDA margin Siltronic Japanese

competitor

USD + 10% vs

EUR and JPY

(JPY/EUR stable)

+ 3% + 3%

EUR + 10% vs

USD and JPY

(JPY/USD stable)

- 4% 0%

JPY + 10% vs

USD and EUR

(USD/EUR stable)

+ 1% - 3%

(1) CO Estimate

Strong USD with positive

effect on all peers

Strong EUR negative for

Siltronic

Strong JPY negative for

Japanese peers

EBITDA margin sensitivity (unhedged, estimated)

Capital Markets Day


Once price reductions reversed, Siltronic will unveil its true

earnings potential

-30%

COLA 2016

16%

Volume

+25%

12%

10%

Price 2012 Cost

reduction

-3%

Price 2018 COLA/

Success

Sharing

FX Volume Cost

reduction

EBITDA margin, in %

Capital Markets Day


Contact and Additional Information

Issuer and Contact

Siltronic AG

Hanns-Seidel-Platz 4

D-81737 München

Investor Relations:

Petra Mueller

email: [email protected]

Tel. +49 89 8564-3133

Additional Information

ISIN: DE000WAF3001

WKN: WAF300

Deutsche Börse: WAF

Listing: Frankfurt Stock Exchange

Prime Standard

Financial Calendar

Q3 2017 Results October 26, 2017

Capital Markets Day


Disclaimer

The information contained in this presentation is for background purposes only and is subject to

amendment, revision and updating. Certain statements contained in this presentation may be

statements of future expectations, future financial performance and other forward-looking statements

that are based on management's current views and assumptions and involve known and unknown risks

and uncertainties. In addition to statements which are forward-looking by reason of context, including

without limitation, statements referring to risk limitations, operational profitability, financial strength,

performance targets, profitable growth opportunities and risk adequate pricing, words such as "may”,

“will”, “should”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “continue”,

“projects” or “seeks”, “potential”, “future”, or “further” and similar expressions may identify forward-

looking statements. By their nature, forward-looking statements involve a number of risks, uncertainties

and assumptions which could cause actual results or events to differ materially from those expressed or

implied by the forward-looking statements. These include, among other factors, changing business or

other market conditions, currency and interest fluctuations, introduction of competitive products, poor

acceptance of new products and services, change of the corporate strategy and the prospects for

growth anticipated by the management. These and other factors could adversely affect the outcome and

financial effects of the plans and events described herein. Statements contained in this presentation

regarding past trends or activities should not be taken as a representation that such trends or activities

will continue in the future. Siltronic AG does not undertake and does not intent to undertake any

obligation to update or revise any statements contained in this presentation, whether as a result of new

information, future events or otherwise. In particular, you should not place any reliance on forward-

looking statements which speak only as of the date of this presentation.


SILTRONIC AG | Hanns-Seidel-Platz 4

81737 Munich

Germany

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