GuruFocus -
- Group Sales: EUR 142 million, a growth of 4.4% year-over-year.
- Gross Margin: 45.2%, compared to 48.9% in Q2 2023.
- EBIT: EUR 35 million, up from EUR 33.1 million last year.
- EBIT Margin: 25.3%, slightly increased year-over-year.
- CapEx Ratio: Reduced to 10.1% of sales.
- Adjusted Free Cash Flow: Positive EUR 1.7 million in Q2 2024.
- Full Year Sales Guidance 2024: EUR 605 million, plus or minus EUR 25 million.
- Operating EBIT Margin Guidance 2024: 25%, plus or minus 2 percentage points.
- CapEx Guidance 2024: Around 12%, plus or minus 2 percentage points of sales.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Elmos Semiconductor SE (FRA:ELG) reported a solid year-over-year sales growth of 4.4% in Q2 2024, reaching EUR 142 million, despite ongoing inventory adjustments by customers.
- The company achieved an EBIT margin increase to 25.3% in Q2 2024, up from 24.8% the previous year, due to lower R&D and SG&A expenses.
- Elmos Semiconductor SE (FRA:ELG) has been promoted to the TecDAX Index, recognizing it as one of the 30 largest listed technology companies in Germany.
- The company is confident in its design wins and expects to overachieve its targets, indicating strong future growth potential.
- Elmos Semiconductor SE (FRA:ELG) is actively localizing its operations in China, which is expected to enhance its market position and growth in the region.
- The automotive semiconductor market is experiencing a normalization phase, with ongoing inventory corrections by customers, which may extend into the second half of the year.
- The global automotive market forecast for 2024 has been slightly adjusted downward, with production volumes expected at around 89 million units, compared to 90 million units last year.
- The company's gross margin decreased to 45.2% in Q2 2024 from 48.9% in Q2 2023, partly due to the absence of one-time effects such as energy price compensation.
- Working capital remains high, impacting cash flow, although the company expects to reduce it over the next year or two.
- Visibility for Q4 2024 remains limited, with uncertainties around customer orders and inventory corrections potentially affecting performance.
A: The inventory correction is ongoing, but most customers have digested more than half of their inventory. The peak is over, and it should improve through the rest of the year. Q3 is expected to show growth both sequentially and year-over-year, but Q4 visibility is limited. The company is not structurally negative on next year but cannot provide concrete guidance yet. - Arne Schneider, CEO
Q: What share of growth comes from design wins, and is there a risk of pricing pressure due to oversupply?
A: Growth is primarily driven by design wins rather than car volume, which remains flat. Pricing for next year will be an individual discussion with customers, focusing on volume and new business. There is no expectation of significant pricing developments. - Arne Schneider, CEO
Q: Why is Elmos Semiconductor more optimistic for the second half compared to other market players?
A: Elmos is agile and has prioritized growth over short-term financial optimization, which has paid off. The company is less dependent on the rise of electromobility and has focused on delivering to customers during the allocation period. - Arne Schneider, CEO
Q: How is Elmos Semiconductor performing in different regions, particularly in Asia?
A: Elmos is strong in Asia, with positive relationships in Japan and a focus on localization in China. The company is adapting to market needs and investing in local content to cater to the dynamic Chinese market. - Arne Schneider, CEO
Q: What is the outlook for working capital and free cash flow?
A: Elmos aims to reduce working capital over the next year or two, focusing on improving cash flow through various projects. The company expects positive free cash flow this year, with further improvements anticipated next year. - Arne Schneider, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.