Q2 2023 Lower orders and sales driven by slowdown in semiconductor investments after three years of unprecedented growth

Based on preliminary figures, VAT’s second-quarter and half-year 2023 results are substantially below the previous year’s periods, confirming the negative market outlook given earlier in the year. The lower volumes are the result of a sharp decrease of investment activities especially in the semiconductor industry. This lower activity was driven by weaker demand, especially in consumer-exposed areas, such as memory chips used in smartphones, tablets or PCs, reflecting macroeconomic uncertainties related to interest rates, inflation and GDP growth. In addition, global demand was further dampened by the persisting trade restrictions by the US and other administrations on integrated circuits and related manufacturing equipment for China. VAT is addressing these market developments with a variety of operative measures and with the objective of retaining flexibility to respond quickly to an improvement. In June, VAT introduced short time work at its production site in Switzerland as a proven operative measure. VAT’s strategic growth initiatives are not affected by these measures.

Q2 2023 results

VAT achieved preliminary Q2 orders of around CHF 155 million, down 56% compared with the same period a year earlier. Compared to Q1 2023, order intake has started to recover and was 14% higher sequentially due to a combination of lower cancellations and slightly increased new order activity. Sales amounted to approximately CHF 221 million, a decrease of around 23% year-on-year and 5% quarter-on-quarter. FX movements, especially USD against CHF, had a substantial negative impact on Q2 2023 sales growth of about -8 percentage points. The preliminary second quarter book-to-bill ratio of 0.7 recovered from the very low level recorded in the first quarter. At the end of June, the order book amounted to approximately CHF 340 million, some 18% lower than at the end of the first quarter of 2023.

Half-year 2023 results

For the first half-year 2023, preliminary orders amounted to approximately CHF 292 million, down 55% compared to a year earlier. Sales decreased by 17% to CHF 454 million year-on-year. Lower volumes, adverse FX effects and persisting inflationary cost pressure further weighed on VAT’s EBITDA margin. Preliminary figures indicate that VAT achieved a H1 EBITDA margin slightly below 30%, a decrease of about 5 percentage points compared to H1 2022. Preliminary free cash flow reached a first six-month level well below the previous year’s due to lower EBITDA and higher capex but in line with the company’s expectations communicated earlier in 2023.

A more detailed discussion of results and an update on VAT’s expectations for the rest of 2023 will be provided with the release of the detailed second quarter and half-year 2023 results on July 27, 2023.

¹ Quarter-on-Quarter; ²Year-on-Year

Financial calendar

ABOUT VAT
We change the world with vacuum solutions – that is our purpose as the world’s leading supplier of high-end vacuum valves. The Group reports in two segments: Valves and Global Service. The Valves segment is a global developer, manufacturer and supplier of vacuum valves for the semiconductor, displays, photovoltaics and vacuum coating industries as well as for the industrial and research sector. Global Service provides local expert support to customers and offers genuine spare parts, repairs and upgrades. VAT reported net sales of CHF 1,145 million in 2022 and employs some 3,000 people worldwide, with representatives in 29 countries and manufacturing sites in Switzerland, Malaysia, and Romania.

FORWARD-LOOKING STATEMENT
Forward-looking statements contained herein are qualified in their entirety as there are certain factors that could cause results to differ materially from those anticipated. Any statements contained herein that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should be considered to be forward-looking statements. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of the company to be materially different from those expressed or implied by such forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond the company’s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the performance, security and reliability of the company’s information technology systems, political, economic and regulatory changes in the countries in which the company operates or in economic or technological trends or conditions. As a result, investors are cautioned not to place undue reliance on such forward-looking statements.

Except as otherwise required by law, VAT disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this report.