In its Q4 2023 earnings call, ASM International NV (ASMI) disclosed a 13% sales increase in constant currencies and significant orders for Gate-All-Around (GAA) technology. Despite a 7% year-on-year decline in revenue, which was 633 million euros, the company's gross margin rose 47.9%. ASM's financial health remains strong with a cash balance of 637 million euros and zero debt. Free cash flow was €447 million in the quarter. However, ASM expects a decline in gross margin in 2024 due to normalization of sales in China. The company is optimistic about the future and is betting on GAA technology to expand its market and boost growth in mature end-to-end segments, especially in China. A new share buyback plan has been announced with a dividend of €2.75 per share.
Key data
- ASM International fourth-quarter sales increased 13% at constant exchange rates, with revenue at 633 million euros.
- Gross margin improved to 47.9%, one point higher than the previous year.
- The company has a solid financial position with €637 million in cash and no debt.
- In 2023, a free cash flow of 447 million euros was achieved.
- The GAA technology orders will increase ASM's market share, with expectations to add $400 million to its available market, delivered for 100,000 wafers.
- A decline in gross margins is expected in 2024 due to the default in the Chinese market.
- ASM announced a share buyback plan and a dividend plan of 2.75 euros per share.
Company Outlook
- ASM expects the semiconductor market to return to double-digit growth in 2024.
- The company is targeting a revenue target of 3,000 to 3,600 million euros by 2025.
- ASM plans to achieve net zero greenhouse gas emissions by 2035 and move to 100% renewable electricity by 2024.
Parish Highlights
- Demand for advanced node capacity additions remained weak in Q4 2023.
- The company cut production in 2023 due to a customer and lack of investment in 3D NAND.
- Gross margin is expected to decline in 2024 as sales normalize in China.
Bullish highlights
- The shift to GAA technology is expected to drive significant investments by 2025.
- Strong growth was recorded in mature end segments and power/analog/wafer product sales.
- The silicon carbide epitaxy business has performed well and is expected to witness strong revenue growth in 2024.
Losses
- ASM reported a €2.5 million shortfall on a project that did not perform as expected.
- Investments of 150 to 200 million euros were lower than expected.
Q&A Highlights
- Benjamin Low expressed confidence in a strong second half of 2024 despite market uncertainties.
- Despite the slowdown in the electric vehicle market, silicon carbide's revenue is expected to increase.
- Company performance related to wafer manufacturing equipment market remains uncertain due to various market factors.
ASM International NV (ASMI) has posted a strong result for 2023 with a focus on innovative GAA technology, which is expected to be a key growth driver. The company's financial stability and strategic investments have positioned it well for the expected market recovery and expansion in the coming years.
InvestingPro Perspectives
ASM International NV (ASMI) has demonstrated resilience and strategic vision in its Q4 2023 results. Let's explore some key InvestingPro data and InvestingPro tips to better understand the company's market position and future potential.
InvestingPro data highlights ASM International's strong financial performance with a market capitalization of USD 30.36 billion, demonstrating the company's significant presence in the semiconductor industry. The P/E ratio stands at 37.13, which indicates investors' confidence in the earnings potential of the company. Also, a trailing twelve-month gross profit margin of 48.27% as of Q4 2023 underlines ASM's performance in managing its production costs relative to its sales.
On InvestingPro's advice, two analysts have revised their earnings estimates for the next period upward, reflecting optimism about ASM's financial prospects. Additionally, ASM International trades at a low P/E relative to its low near-term earnings growth, suggesting the stock may be undervalued given its future earnings potential. This could be a compelling point for investors considering the company's strategic investments in GAA technology and its strong free cash flow.
For readers looking for more in-depth analysis, https://www.investing.com/pro/ASMIY has 19 additional InvestingPro Tips, including ASM's dividend stability and asset liquidity. These tips can provide valuable guidance to investors looking to make informed decisions about their investments in ASM International.
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