Slide 1: Siltronic – a leading producer of silicon wafers
Siltronic – a leading producer of silicon wafers Full Year Results 2016 March 14, 2017 © Siltronic AG 2017
Slide 2: Financial Year 2016: Highlights
Financial Year 2016: Highlights Sales Sales of EUR 933.4mn (2015: EUR 931.3mn) EUR 146.0mn (2015: EUR 124.0mn), EBITDA Without negative FX effects* EBITDA would have been EUR 166.9mn EBITDA margin 15.6% (2015: 13.3%) Margin Without negative FX effects* EBITDA margin would have been 17.9% EBIT positi
Slide 3: Agenda
Agenda Market Overview Financials Outlook Appendix © Siltronic AG 2017 3 of 36
Slide 4: Market Update
Market Update Macro Q4’16 GDP growth in China, Japan and the U.S was slightly higher than in Q3’16. Unemployment stays low in the U.S. and Japan; Eurozone continues to recover slowly. Consumer confidence was relatively stable in most regions; Eurozone improved. Global PMI is positive, improv
Slide 5: Industrial and automotive are expected to grow strong in the next years
Industrial and automotive are expected to grow strong in the next years, while silicon demand growth for mobile phones slowing Silicon demand for main wafer consuming applications, bn cm² p.a. and CAGR Computing Mobile Phones 5% 24 4% 21 3% 2% 4% 19 18 19 17% 18 16 10 2011 2014 2017 2020 2011 2014 2
Slide 6: Silicon demand for NAND driven by growing demand for solid state drives
Silicon demand for NAND driven by growing demand for solid state drives and increasing storage in smartphones NAND silicon area demand by applications, bn cm² p.a. 16 12 8 4 0 2012 2014 2016 2018 2020 Solid-State Drives Smartphones Memory Cards Tablet Computers Others Source: IHS Markit Q1 2017 © Si
Slide 7: Within a car, most silicon is used for powertrain, infotainment and safety
Within a car, most silicon is used for powertrain, infotainment and safety 300mm demand in automotive, in % 19% Other 30% Automotive 11% 26% 51% 63% Powertrain Chassis & Safety (incl. ADAS) Infotainment and Connectivity 6% 28% Body & Convenience 66% 300 mm 200 mm SD 1 ADAS = advanced driver as
Slide 8: 300mm demand is expected above industry capacity
300mm demand is expected above industry capacity, after almost a decade of over-supply 300mm effective capacity vs. demand, kpcs per month ~5.3mn wafers Comments per month Extension not considered at current price levels ~30% to 35% overall empty shell capacity estimated to be available Would
Slide 9: Agenda
Agenda Market Overview Financials Outlook Appendix © Siltronic AG 2017 9 of 36
Slide 10: Q4 sales development driven by positive mix, increased spot prices and tailwind from JPY
Q4 sales development driven by positive mix, increased spot prices and tailwind from JPY Sales, in EUR mn +3.9% Comments Positive 246.3 229.6 237.0 Volume growth y-o-y 220.6 215.3 Volume stable q-o-q Higher ASP in Q4 due to mix and increased spot prices Some tailwind from strong JPY Pric
Slide 11: Positive development of EBITDA and EBITDA margin
Positive development of EBITDA and EBITDA margin due to cost reductions and decreasing hedging expenses EBITDA margin and EBITDA in EUR mn Comments 21.1 16.5 18.5 Positive 15.6 15.1 20.5 Higher ASP in Q4 q-o-q 15.3 15.6 due to mix and increased 10.8 10.7 spot prices Cost reduction on track H
Slide 12: Positive development of net result
Positive development of net result Result and income tax, in EUR mn Comments -7.2 Net profit of EUR 8.7mn in 2016 15.9 Successful continuation of cost reduction program 8.7 contributed to positive development EUR 7.2mn effective taxes -9.5 Potential future tax advantages based on tax losses
Slide 13: Equity ratio of 40.2%, Net financial assets of EUR 175mn
Equity ratio of 40.2% Net financial assets of EUR 175mn Balance sheet, in EUR mn Dec 31, Dec 31, Comments Equity and Dec 31, Dec 31, Comments Assets 2016 2015 Dec 31, 2016 liabilities 2016 2015 Dec 31, 2016 Non-current 554.1 579.1 Equity 425.3 497.3 PP&E 519.8 542.9 Siltronic 431.9 500.5 25 intangib
Slide 14: Pension provision increased y-o-y due to lower interest rates
Pension provision increased y-o-y due to lower interest rates; however down q-o-q Pension provision, in EUR mn Comments 496 473 Changes in interest rates 429 influence evaluation of 395 379 pension provision 299 Change in interest rates 292 294 directly reflected in equity (OCI) One-time payme
Slide 15: CapEx: spending mostly for capability and cost reductions
CapEx: spending mostly for capability and cost reductions Adjusted1 CapEx and D&A, in EUR mn CapEx 2015 and 2016 New crystal pulling hall in Freiberg Exhange of old crystal pullers vs. state-of-the-art equipment Automation projects in Germany ~115 ~100 2017 focus on 158.3 Capability improvem
Slide 16: Payments for CapEx above average in 2016
Payments for CapEx above average in 2016 Cash flow, in EUR mn Comments CapEx for investments in state-of-the-art crystal pullers 2015 2016 and further automation of production sites Cash flow from operating activities 96.1 115.6 Free cash flow still burdened by repayment of prepayments. These wi
Slide 17: Successful cost reduction programs continue
Successful cost reduction programs continue Cost savings, in EUR mn1 ~55 Additional savings levers: ~45 Investing in automation in Germany Investing in new pullers to ~30 improve yields and capabilities 20-25e Poly cost optimization ongoing Further productivity increases through various init
Slide 18: Agenda
Agenda Market Overview Financials Outlook Appendix © Siltronic AG 2017 18 of 36
Slide 19: Siltronic Outlook 2017
Siltronic Outlook 2017 (as per March 14, 2017) EBITDA margin at least 20% ROCE substantially higher than in 2016, approximately at WACC Free Cash Flow clearly positive; by far above 2016 Sales at least EUR 1bn R&D unchanged at approx. 7% of sales Cost Position potential savings of around EUR 20mn to
Slide 20: Appendix
Appendix © Siltronic AG 2017 20 of 36
Slide 21: Siltronic is a strong wafer supplier with leading-edge technology
Siltronic is a strong wafer supplier with leading-edge technology Top 5 wafer producers serve more than 90% of market across all diameters 16% 10% 15% 28% 31% LG Siltron Siltronic Shin Etsu Sumco GlobalWafers Sources: Companies’ revenue reports 2016, converted to USD mn © Siltronic AG 2017 21 of 36
Slide 22: Financials improved strongly over the last years
Financials improved strongly over the last years Adjusted1 financial figures (EUR mn) 2012 2013 2014 2015 2016 Sales 1030.0 875.5 853.4 931.3 933.4 EBIT (75.5) (87.3) (31.6) 2.7 27.0 EBIT margin in % (7.3) (10.0) (3.7) 0.3 2.9 EBITDA 122.5 112.6 117.7 124.0 146.0 EBITDA margin in % 11.9 12.9 13.8 13
Slide 23: FY sales development driven by higher wafer volumes and strong JPY
FY sales development driven by higher wafer volumes and strong JPY, off-setting lower ASP y-o-y in mn EUR Sales 2015 2016 Change Change in % Q1 238.7 220.6 -18.1 -7.6 Q2 246.7 229.6 -17.1 -6.9 Q3 230.6 237.0 +6.4 +2.8 Q4 215.3 246.3 +31.0 +14.4 FY 931.3 933.4 +2.1 +0.2 © Siltronic AG 2017 23 of 36
Slide 24: Positive EBITDA development driven by cost reductions and lower hedging expenses
Positive EBITDA development driven by cost reductions and lower hedging expenses in mn EUR 2015 2016 EBITDA Hedging EBITDA w/o EBITDA Hedging EBITDA w/o reported 2015 hedging reported 2016 hedging 2015 2015 2016 2016 Q1 40.1 2.1 42.2 23.6 9.7 33.3 Q2 31.4 17.6 49.0 35.1 2.7 37.8 Q3 29.3 15.5 44.8 36
Slide 25: EBITDA development since 2014
EBITDA development since 2014 Adjusted1 EBITDA margin and EBITDA in EUR mn 20.5 17.6 16.8 15.4 15.6 15.3 13.4 12.7 12.7 10.8 10.7 8.4 50.5 39.2 40.1 35.1 36.9 33.2 31.4 28.2 29.3 23.2 23.6 17.1 Q1 Q2 Q3 Q4 2014 Q1 Q2 Q3 Q4 2015 Q1 Q2 Q3 Q4 2016 EBITDA EBITDA margin 1 adjustments are based on the ass
Slide 26: EBITDA development excluding FX and hedging since 2014
EBITDA development excluding FX and hedging since 2014 Adjusted1 EBITDA margin and EBITDA in EUR mn, excl. FX effects2 21.1 19.9 19.4 18.5 17.7 17.7 16.5 15.6 15.1 12.9 11.8 9.0 52.0 49.0 42.2 44.8 43.9 39.4 37.8 33.7 33.3 27.9 24.8 18.3 Q1 Q2 Q3 Q4 2014 Q1 Q2 Q3 Q4 2015 Q1 Q2 Q3 Q4 2016 EBITDA w/o
Slide 27: Historically low discount rates inflate DBO
Historically low discount rates inflate DBO; expected asset returns significantly higher DBO and pension reserve as of Dec 31, 2016, in EUR mn Pension Reserve 395 = 895 - 500 IFRS • IFRS interest uses bonds yields interest only, assets include bonds, rate equity, real estate and USA, mostly funded 1
Slide 28: After a decade of low utilization market finally back to positive momentum
After a decade of low utilization market finally back to positive momentum Profit drivers Capacity utilization 300mm Capacity expansion Depreciation ~60% capacity utilization in ~1.5% p.a. expansion due to Declining in 2014, 2015 and 2008 OEE (Overall Equipment 2018 due to lower Capex Slowly
Slide 29: Based on technology leadership Siltronic is well positioned to improve returns
Based on technology leadership Siltronic is well positioned to improve returns Improve returns and stay ahead in technology Strategic Focus Benefit Ensure Improve Execute from market technology & financial performance cost reduction growth & quality leadership & cash flow roadmaps favorable FX Siltr
Slide 30: Investment highlights – Siltronic strengths
Investment highlights – Siltronic strengths 1 Strong market position in semiconductor silicon wafer manufacturing 2 Technology and quality leader Supplier to all top 20 silicon wafer consumers with 3 well-established relationships 4 Strong track record in efficiency improvement and cost reduction 5
Slide 31: Silicon area demand continues to grow
Silicon area demand continues to grow Silicon wafer demand, in bn in2 +5% 11.3e 10.7 10.4 10.1 9.4 9.0 9.0 9.1 2010 2011 2012 2013 2014 2015 2016 2017 Source: SEMI (Silicon Area until 2016), IHS Markit Technology (Semiconductor Silicon Demand Forecast Tool, Q1‘17 Update, Estimate 2017) © Siltronic A
Slide 32: SSDs and industrial applications remain the main drivers for silicon demand
SSDs and industrial applications remain the main drivers for silicon demand. Turnaround in PC and tablet market also helps. Computing Servers, mobile PCs and PC upgrades drive demand for SSDs. Mobile PC units will decline in 2017 but at the slowest rate in 10 years. Mobile Phones Smartphone sh
Slide 33: NAND is the growth engine in the memory sector
NAND is the growth engine in the memory sector. Silicon area for DRAM only shows moderate growth. Split of memory silicon area market by DRAM and NAND, bn cm² 30 20 10 0 2012 2014 2016 2018 2020 DRAM NAND Source: IHS Markit Q1 2017 © Siltronic AG 2017 33 of 36
Slide 34: Bit growth is expected to exceed bit density growth
Bit growth is expected to exceed bit density growth in the foreseeable future. This will result in growing wafer demand. 2016-2019 NAND market growth 300mm NAND silicon market, k/m bit density growth: ~33% CAGR +7% (technological progress) 1.870 1.760 1.630 bit demand growth: ~40% 1.510 (enabled
Slide 35: Contact and Additional Information
Contact and Additional Information Issuer and Contact Additional Information Siltronic AG ISIN: DE000WAF3001 Hanns-Seidel-Platz 4 WKN: WAF300 D-81737 München Deutsche Börse: WAF Listing: Frankfurt Stock Exchange Investor Relations: Prime Standard Petra Mueller email: petra.mueller@siltronic.com Tel.
Slide 36: Disclaimer
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 and other forward-looking statements that are based on management's