LOEBEN, AUSTRIA -- AT&S said first half sales slipped marginally to EUR 386.5 million ($429.1 million), down from EUR 387.1 million a year ago. 

IC substrate revenue rose through the period, which ended Sept. 30, offsetting a sequential drop in the fabricator's Mobile Devices & Substrates segment.

The net loss for the period was EUR 14.8 million, down from a profit of EUR 42.1 million in the prior year due to the startup costs related to the company's Chongqing, China, plant and significantly higher negative finance costs. The firm spent EUR 37.3 million on the Chongqing plant in the first half.

EBITDA declined 44.1% to EUR 52.1 million in the first half. Adjusted EBITDA was EUR 89.4 million, down 4.6% on price/product mix effects in the Mobile Devices & Substrates segment. EBITDA margin was 13.5%, down 10.6 percentage points from the previous year. Adjusted for the Chongqing project, the margin was 23.8%.

The ramp of Chongqing Plant 1 remains flatter than expected due to process optimization, the company said.

In an announcement, CEO Andreas Gerstenmayer said AT&S is lowering its guidance for its 2017 fiscal year.

"We showed a stable development in the core business in the first half and profitability is still high. In relation to the very high prior-year level, we came close to matching the level of last year despite stronger seasonality in the first quarter and higher price pressure. Customer demand is very good at present: We could take in significantly more orders if we had more capacity. However, the new plants in Chongqing still have an impact on our results in the ramp-up phase, and the startup curve for IC substrates is still flatter. Because of that and the fact that we have to temporarily reduce capacity at our existing plant in Shanghai due to the adaption to a new technology, we had to adjust our outlook for the year as part of the quarterly forecasting process. We still see growing markets in all customer segments, but as a result of these factors, we expect slightly slower growth and lower profitability than originally assumed.“

Demand for high-end printed circuit boards for mobile devices was good in the first half, but characterized by considerably stronger seasonality in the first quarter in comparison with the prior-year period. The IC substrates segment recorded negative currency effects, forcing revenue down 1.1% to EUR 269.7 million. With revenue growth of 2.9%, this segment increased the prior-year figure from EUR 169.5 million to EUR 174.4 million. The main drivers were continued strong revenue from high-end PCBs for automotive, which reflects the trend toward more electronic components in cars, and very strong revenue growth in the medical sector. Industrial sector revenue remained high. EBITDA rose 19.9% to EUR 23 million. 

To date AT&S has invested EUR 392.9 million in the Chongqing IC substrate plant, but while production is running at full capacity, volumes and yields are not yet satisfactory, AT&S said. AT&S is also ramping investment in new technology at its Shanghai plant to meet higher customer demand. That plant builds primarily for the mobile devices end-market. Serial production of the new technology is scheduled to start at the beginning of the second half of the calendar 2017. 

AT&S now expects revenues  to increase 4 to 6% for its fiscal year 2017, which ends in March. EBITDA margin should range between 15 to 16% primarily due to startup effects in Chongqing. EBITDA margin in its core business should be higher, AT&S added. 

Ed.: 1 EUR = $1.11018