S&T AG: Microchip crisis slows growth despite strong order intake

Thursday, 4th November 2021

Austria

Revenue growth in Q1-Q3 of 9.2% to EUR 913.8 million (PY: EUR 836.4 million)
EBITDA increases slightly in Q1-Q3 to EUR 85.6 million (PY: EUR 83.7 million)
Order backlog grows 33.1% to EUR 1.233.9 since the beginning of the year (EUR 927.2 million)
Project "Focus" evaluates even stronger focus on IoT business

Linz, November 04, 2021: S&T AG (ISIN: AT0000A0E9W5, WKN: A0X9EJ, stock code: SANT) reported another record order intake of EUR 410 million in Q3 2021. Consequently, orders of around EUR 1,221 million are offset by revenues of only EUR 913.8 million after the first nine months. The downside is almost EUR 80 million in orders that could not yet be recorded as revenue as of September 30, 2021, due to the microchip crisis, holding back revenue growth as well as having a negative impact on profitability. Compared to the 9 months in the last financial year, sales nevertheless increased by 9.2% to EUR 913.8 million (PY: EUR 836.4 million). At EUR 85.6 million, EBITDA is slightly above the previous year's figure (EUR 83.7 million).

Operating cash flow after 9 months was negatively impacted by EUR 40.7 million increase in inventories due to the chip crisis and amounted to minus 14.6 million. After a gradual reduction of the component bottlenecks, a significant improvement of the operating cash flow can be expected. At 48 cents, earnings per share after 9 months are at the previous year's level. At 32.9%, the equity ratio is approximately in line with the year-end figure for 2020 (32.8%).

Overall, the demand for intelligent IoT solutions from the S&T Group remains strong and is further boosted by the economic recovery following the COVID-19 crisis. While the IT Services sector is hardly affected by the microchip crisis, delays to deliveries are currently affecting IoT business in particular. Depending on the delivery delays and the availability of components, in 2021 S&T expects a revenue of EUR 1,330 to 1,400 million with an EBITDA margin of around 10%. It is expected to deliver the delayed shipments of approximately EUR 80 million in addition during financial year 2022 which will provide a positive boost to revenue growth in the IoT segment.

Since last quarter, S&T has been evaluating a stronger IoT orientation and the separation or sale of the "IT Services" sector as part of project "Focus". Missing IT service revenues are to be replaced in future by expanding existing IoT business and developing new IoT business sectors.

Hannes Niederhauser, CEO: " Despite the strong order intake the sales and revenue development in the current year - due to the chip crisis - has unfortunately remained below our expectations. On the other hand, demand and also order backlog make us optimistic for the next quarters. Q3 saw the official start to our project "Focus". We intend to focus even more closely in future on our high-margin IoT business sector to enable gross margins of over 50% and EBITDA margins of over 15% in the medium term. With the new focus of S&T, we will be targeting revenues of EUR 2,000 million in 2025, assuming significantly higher profitability than in our previous "Agenda 2023".