Aixtron SE ( AIXG) Q4 2011 Earnings Conference Call March 1, 2012 9:00 AM ET Executives Guido Pickert – Director of Investor Relations Paul Hyland – President and Chief Executive Officer Wolfgang Breme – Executive Vice President and Chief Financial Officer Analysts David Mulholland – UBS Simon Schafer – Goldman Sachs Maxime Mallet – Natixis Janardan Menon – Liberum Capital Olga Levinzon – Barclays Capital Peter Knox – Societe Generale Andrew Huang – Sterne, Agee David O’Connor – Exane Sandeep Deshpande – JPMorgan Robert Fundel [ph] – ThinkEquity Timothy Arcuri – Citigroup Presentation Operator Good afternoon, ladies and gentlemen, and welcome to the Aixtron Full Year 2011 Results Conference Call.
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You may also wish to have a look at our latest IR presentation, of which includes additional information on markets and technologies as many of you know. This call is not being immediately presented via webcast or any other medium. However, we will place an audio file of the recording or a transcript on our website at some point after the call.I’m afraid that today we’re a little bit tight of time. So I would therefore quickly pass it directly onto Paul to start the call. Paul? Paul Hyland Okay. Thank you, Guido. Ladies and gentlemen, good afternoon, to those of you calling in from Europe. Good morning to those of you joining us from the US. And good evening to investors calling in from Asia. I’d like to welcome you on behalf of Aixtron’s executive board to the presentation of our 2011 full year results. Although the 2011 result that we present to you today fall short of 2010’s record numbers, I hope once you’ve heard what we have to present to you that you will agree that we can still be pleased with what we achieved in a very difficult 12 months for everybody. However you look at 2011, it was certainly an extraordinary year by any standard. Despite the backdrop of a very challenging macroeconomic environment, we were still delivering extremely high revenues in the first half for the year. The first six months revenues of €381 million would still have been the second highest annual revenue in our history. The strong first half revenue figure was mainly driven by demand from LED backlighting, early lighting applications, and, significantly, a continuation of a generous regional subsidy to manufacturers in China. However, progressively through the course of the year, Asian LED customers began to feel the effects of rapidly declining consumer confidence and a consequent lower demand for LED backlit TVs and monitors.
A combination of new MOCVD capacity coming on line and declining LED demand contributed to the development of overcapacity and, in turn, led to significant LED price declines and consequent margin pressures for these customers. We also saw a continuation of the difficulties that many new LED customers were experiencing in putting in place the necessary infrastructure and expertise to support their business plans and, more specifically, in the second half increasing credit tightness.These specific factors, amongst others, led to the very abrupt slowdown in demand for our system in the third quarter, particularly in Asia, which led us to carry out a thorough review of our plans for the remainder of 2011 in September. At the same time as we reviewed our order intake outlook, we also risk-reviewed the equipment order backlog. As a result of these reviews, we took the decision both to reduce the previously published order backlog by €100 million to €273.5 million and to issue a revised guidance of revenues of €600 million to €650 million for 2011 with an EBIT margin of 25% to 30%. The yearend achievement of €611 million revenue is only just within the range, lower-end of our guidance range, makes the ongoing suppressed nature of the LED industry very clear. The very low order intake for Q4 brings the severity of this downturn even more sharply into focus. We have subsequently decided to take an even more cautious view of our ability to convert all of our inventory into revenue and consequently have decided to write down €40 million to recognize the risk of an extended downturn overlapping with planned new product releases. The effect of these adjustments is a reduction of the 2011 EBIT figure from €153 million or 25% of sales to €113 million or 18.5% of sales, and a reduction of a net result by €28 million to 79.5%, thereby reducing the return on sales by 5 percentage points to 13%. Wolfgang Breme, our CFO, will expand on this decision and [the facts] in his comments later on.
Let me now start the formal presentation with an overview of the financial highlights and some comments on the general environment which influenced our 2011 result. Wolfgang will then take you through some more aspects of the financial and business performance. And, finally, I’ll end the presentation by coming back to some thoughts on the market and finish with a brief look at the outlook for 2012.Read the rest of this transcript for free on seekingalpha.com