News Article
ASML results highlight industry malaise
ASML announces 2008 fourth quarter and full year results and implements structural changes to develop a more effective cost-structure during downturn.
ASML has announcesd 2008 fourth quarter and full year results according to US GAAP as follows:
· Q4 2008 net sales of EUR 494 million versus Q3 2008 net sales of EUR 696 million (Q4 2007 net sales of EUR 955 million). Full year 2008 net sales were EUR 2,954 million, down 21.6 percent versus 2007 net sales of EUR 3,768 million.
· Q4 2008 net loss of EUR 88 million, or 17.8 percent of net sales, including restructuring and impairment charges of EUR 138 million. Excluding the effect of these fourth quarter charges net of taxes, ASML would have booked net income of EUR 11 million or 2.3 percent of net sales, versus Q3 2008 net income of EUR 73 million or 10.5 percent of net sales (Q4 2007 net income of EUR 193 million or 20.2 percent of net sales). Full year 2008 net income amounted to EUR 322 million or 10.9 percent of net sales, down from 2007 net income of EUR 671 million or 17.8 percent of net sales.
· Q4 2008 net bookings valued at EUR 127 million with 13 systems including 5 new and 8 used systems, leading to an order backlog valued at EUR 755 million as of December 31, 2008.
“As per our December 18, 2008 announcement, net sales in the fourth quarter of 2008 fell just below EUR 500 million and net bookings were very weak, confirming the major impact of the worldwide recession on the semiconductor equipment industry,” said Eric Meurice, president and Chief Executive Officer of ASML. “Fourth quarter sales were impacted compared with previous guidance, as three systems were delayed by memory customers. Low fourth quarter bookings of 13 units were the result of a virtual freeze in capital expenditure by most customers, due to declining utilization rates and the inability of some customers to finance their technology transition plans. In view of the medium-term market prospects, we took restructuring and impairment charges in the fourth quarter of EUR 138 million, reflecting our implementation of measures to structurally lower our cost base and the introduction of new, more cost-competitive, scanner models,” Meurice said.
ASML’s order backlog as of December 31, 2008 was EUR 755 million, totaling 41 systems with an average selling price of EUR 18.4 million. ASML’s backlog as of September 28, 2008 was valued at EUR 1,028 million, totaling 53 systems with an average selling price of EUR 19.4 million.
In Q4 2008, ASML generated a net loss of EUR 88 million, including exceptional restructuring and impairment charges of EUR 138 million, or a net loss of EUR 0.20 per ordinary share as compared with a net income in Q3 2008 of EUR 73 million or EUR 0.17 per ordinary share. We recorded net income of EUR 322 million (EUR 0.75 per ordinary share) for the full year, compared with EUR 671 million (EUR 1.45 per ordinary share) for 2007.
“The severity of the global economic downturn has caused semiconductor manufacturers to delay their investment plans. The uncertainty as to the timing of a semiconductor end-product demand pick up and the time needed to complete the current consolidation and restructuring activities in the memory sector, makes a recovery prediction impossible. We have therefore taken decisive actions to adjust our cost structure to cope with these exceptional economic circumstances so we can generate cash at a low level of sales, while not impacting our current aggressive technology development roadmap. In addition, we plan to maintain a level of manufacturing capacity to ramp production to customer needs without lengthy lead times, as the lithography market may pick up quickly once end-product demand recovers,” Meurice said.
ASML expects Q1 2009 net sales between EUR 180 million to EUR 200 million, and gross margin in Q1 2009 of about 8 percent. R&D expenditures are expected to be at EUR 117 million net of credits and SG&A costs are expected at EUR 44 million.
ASML has reduced costs through a comprehensive company-wide efficiency program, while not impacting key research and development projects. We have been able to react quickly by using the flexibility of our business model, including significant use of contract and flexible labor. ASML still has an extensive pool of flexible contracts and we intend to avoid forced redundancies. By Q1 2009 we expect to have cut our operational expenses by EUR 50 million per quarter. We expect that these savings, in combination with reduced components purchasing and the assembly of components already in inventory, will help us generate a positive Q1 operating cash flow. Also, about half of our quarterly cost savings will be sustainable when the economy recovers, making ASML a much leaner and more profitable company.
We will continue investing in our new Double Patterning and EUV lithography platforms to address the 32 nanometer node and beyond, in order to lead the semiconductor industry to the next generations of chip manufacturing technologies. Our EUV production system roadmap supports cost-effective chip manufacturing to 22 nanometers and smaller; we will start deliveries of five production systems already in 2010. In addition, ASML has developed a range of resolution enhancement techniques which leading vendors are implementing to reduce cost per chip. These techniques, from advanced illumination shaping to radical mask pattern enhancements, require powerful computational modeling and intimate knowledge of the scanner systems. This is a unique combination of capabilities in which ASML has established a leading role thanks to the know-how acquired through our Brion division.
· Q4 2008 net sales of EUR 494 million versus Q3 2008 net sales of EUR 696 million (Q4 2007 net sales of EUR 955 million). Full year 2008 net sales were EUR 2,954 million, down 21.6 percent versus 2007 net sales of EUR 3,768 million.
· Q4 2008 net loss of EUR 88 million, or 17.8 percent of net sales, including restructuring and impairment charges of EUR 138 million. Excluding the effect of these fourth quarter charges net of taxes, ASML would have booked net income of EUR 11 million or 2.3 percent of net sales, versus Q3 2008 net income of EUR 73 million or 10.5 percent of net sales (Q4 2007 net income of EUR 193 million or 20.2 percent of net sales). Full year 2008 net income amounted to EUR 322 million or 10.9 percent of net sales, down from 2007 net income of EUR 671 million or 17.8 percent of net sales.
· Q4 2008 net bookings valued at EUR 127 million with 13 systems including 5 new and 8 used systems, leading to an order backlog valued at EUR 755 million as of December 31, 2008.
“As per our December 18, 2008 announcement, net sales in the fourth quarter of 2008 fell just below EUR 500 million and net bookings were very weak, confirming the major impact of the worldwide recession on the semiconductor equipment industry,” said Eric Meurice, president and Chief Executive Officer of ASML. “Fourth quarter sales were impacted compared with previous guidance, as three systems were delayed by memory customers. Low fourth quarter bookings of 13 units were the result of a virtual freeze in capital expenditure by most customers, due to declining utilization rates and the inability of some customers to finance their technology transition plans. In view of the medium-term market prospects, we took restructuring and impairment charges in the fourth quarter of EUR 138 million, reflecting our implementation of measures to structurally lower our cost base and the introduction of new, more cost-competitive, scanner models,” Meurice said.
ASML’s order backlog as of December 31, 2008 was EUR 755 million, totaling 41 systems with an average selling price of EUR 18.4 million. ASML’s backlog as of September 28, 2008 was valued at EUR 1,028 million, totaling 53 systems with an average selling price of EUR 19.4 million.
In Q4 2008, ASML generated a net loss of EUR 88 million, including exceptional restructuring and impairment charges of EUR 138 million, or a net loss of EUR 0.20 per ordinary share as compared with a net income in Q3 2008 of EUR 73 million or EUR 0.17 per ordinary share. We recorded net income of EUR 322 million (EUR 0.75 per ordinary share) for the full year, compared with EUR 671 million (EUR 1.45 per ordinary share) for 2007.
“The severity of the global economic downturn has caused semiconductor manufacturers to delay their investment plans. The uncertainty as to the timing of a semiconductor end-product demand pick up and the time needed to complete the current consolidation and restructuring activities in the memory sector, makes a recovery prediction impossible. We have therefore taken decisive actions to adjust our cost structure to cope with these exceptional economic circumstances so we can generate cash at a low level of sales, while not impacting our current aggressive technology development roadmap. In addition, we plan to maintain a level of manufacturing capacity to ramp production to customer needs without lengthy lead times, as the lithography market may pick up quickly once end-product demand recovers,” Meurice said.
ASML expects Q1 2009 net sales between EUR 180 million to EUR 200 million, and gross margin in Q1 2009 of about 8 percent. R&D expenditures are expected to be at EUR 117 million net of credits and SG&A costs are expected at EUR 44 million.
ASML has reduced costs through a comprehensive company-wide efficiency program, while not impacting key research and development projects. We have been able to react quickly by using the flexibility of our business model, including significant use of contract and flexible labor. ASML still has an extensive pool of flexible contracts and we intend to avoid forced redundancies. By Q1 2009 we expect to have cut our operational expenses by EUR 50 million per quarter. We expect that these savings, in combination with reduced components purchasing and the assembly of components already in inventory, will help us generate a positive Q1 operating cash flow. Also, about half of our quarterly cost savings will be sustainable when the economy recovers, making ASML a much leaner and more profitable company.
We will continue investing in our new Double Patterning and EUV lithography platforms to address the 32 nanometer node and beyond, in order to lead the semiconductor industry to the next generations of chip manufacturing technologies. Our EUV production system roadmap supports cost-effective chip manufacturing to 22 nanometers and smaller; we will start deliveries of five production systems already in 2010. In addition, ASML has developed a range of resolution enhancement techniques which leading vendors are implementing to reduce cost per chip. These techniques, from advanced illumination shaping to radical mask pattern enhancements, require powerful computational modeling and intimate knowledge of the scanner systems. This is a unique combination of capabilities in which ASML has established a leading role thanks to the know-how acquired through our Brion division.
