Semiconductor industry gains momentum, Comet on track

Ad hoc announcement pursuant to Art. 53 LR

First half of 2024

• As expected, net sales still below previous year at CHF 189.3 million
  (HY23: CHF 207.0 million, –8.6%)
• EBITDA margin of 6.9% (HY23: 6.9%)
• Book-to-bill of 1.1 (HY23: 0.8)

Outlook for second half of 2024

• Continued recovery in semiconductor equipment demand expected
• Mixed dynamics within the automotive, aerospace and security industries
• Guidance for FY24 confirmed: Net sales of CHF 440 million to CHF 480 million, EBITDA margin of 15.0% to 17.0%

Comet recorded a decline in net sales of 8.6% to CHF 189.3 million in the first half of 2024 (HY23: CHF 207.0 million). EBITDA fell by 9.1% to CHF 13.0 million (HY23: CHF 14.3 million). In HY24, Comet continued to invest in strategic projects and in its readiness to prepare for the expected upturn in orders. The EBITDA margin remained unchanged at 6.9% (HY23: 6.9%). Net profit increased to CHF 4.1 million (HY23: CHF 1.9 million), while free cash flow rose from CHF -15.3 million to CHF 8.1 million.

The decline in net sales in the first half of the year is due to a slow start to the year. However, business activities picked up noticeably over the course of the reporting period. Net sales of CHF 80.9 million in Q1/24 were followed by net sales of CHF 108.4 million in Q2/24 (Q2/23: CHF 107.5 million). The brighter business environment is also reflected in a 22% increase in incoming orders in HY24 compared to HY23 and a book-to-bill of 1.1 for HY24.

The improved market environment in the semiconductor industry was largely driven by logic chips for AI applications and, on the memory side, high-bandwidth memory (HBM). The broad memory market - both DRAM and 3D NAND - is also on the road to recovery, with increasing momentum expected in the second half of the year. This development will trigger investments in semiconductor production equipment with a time lag of a few months and thus further improve Comet's order intake in H2/24. In contrast to the upturn in the semiconductor industry, customer investments in the automotive, aerospace and security sectors were characterized by caution, with the aerospace and security sectors showing some momentum, while the automotive sector was less dynamic.

In the first half of the year, Comet focused on preparing for the imminent upturn in its semiconductor business and on pushing ahead with key projects in all divisions. This will ensure that the company is ready with its new products in plasma control and X-ray technology.

Comet closed the first half of the year with a strong balance sheet, an equity ratio of 61.9% (year-end 2023: 62.5%) and cash and cash equivalents of CHF 84.6 million (year-end 2023: CHF 86.7 million). This puts Comet in a position to finance its investment projects from its own resources and strengthen its technology leadership by launching new products.

PCT: Improved profitability, further design wins for Synertia^®

Compared to the previous year, net sales in the Plasma Control Technologies (PCT) division were 11.7% lower at CHF 94.3 million (HY23: CHF 106.8 million). However, significantly higher net sales in Q2/24 compared to Q1/24 confirm that the upward trend in the semiconductor cycle has started. In the first half of 2024, the division achieved a 59.9% higher operating result at EBITDA level of CHF 9.1 million (HY23: CHF 5.7 million) with a margin of 9.7% compared to 5.3% in the previous year. This increase was achieved thanks to an improved cost structure and the absence of one-off costs from the closure of volume production of matchboxes in San Jose, USA.

During the correction in the semiconductor cycle, the division pressed ahead with strategic projects. Further design wins were achieved with Synertia^® RFG (generator) and models with different power and frequency ranges were made ready for the market, planning first customer facing in the second half of 2024. The first Synertia^® RFM (matchbox) based on the Gen 3 Match platform was launched at Semicon West and the first demonstrators are being built for customers in Asia. This is a significant success in the implementation of Synertia^® as an RF power delivery platform.

IXS: CA20 on track; upfront investments and partial price pressure weigh on profitability

The X-Ray Systems (IXS) division faced stagnant net sales due to a sluggish automotive market, price pressure in certain markets, and the discontinuation of low-margin products. Net sales amounted to CHF 55.2 million, a slight decrease of 2.9% compared to CHF 56.8 million in the first half of 2023. Investments in strategic realignment resulted in an EBITDA of CHF -1.9 million, down from a slightly positive CHF 0.2 million in the same period of the previous year. The EBITDA margin amounted to -3.5%, compared to 0.3% in HY23.

In response to slower growth in traditional sectors, the IXS division accelerated the investment in the repositioning towards the semiconductor market. Key initiatives in 2024 include advancing the CA20 semiconductor inspection solution from the laboratory to a production version. The solutions are equipped with state-of-the-art inspection workflows based on IXS' transformative Dragonfly software. The market launch of CA20 for semiconductor factories is planned for 2024. As part of this, efficient key account management and a first-class sales and service organization will be established, particularly in the Asian region. Additional investments were made in R&D, driven by discussions with potential customers who have shown significant interest in using the CA20 in their laboratory and production processes.

IXM: Consolidation of growth from the previous year, numerous opportunities

As expected, the X-Ray Modules division (IXM) was unable to match the strong performance of the previous year, which was characterized by backlog effects. Net sales fell by 8.6% year-on-year to CHF 46.5 million (HY23: CHF 50.8 million). EBITDA amounted to CHF 7.3 million (HY23: CHF 10.4 million), which corresponds to a year-on-year decline of 29.7%. The EBITDA margin fell from 20.4% in HY23 to 15.7%.

Although IXM has numerous opportunities in the high-growth markets for batteries and electronics, investments in those industries are currently being made cautiously due to economic and geopolitical uncertainties. However, to exploit these opportunities, the division is continuously investing in the further development of its technologically leading X-ray tubes and modules.

Outlook

The long-term growth prospects for Comet remain positive and intact. These will be driven on the one hand by the rising demand for production capacity for microchips in the coming years and on the other by new applications and technologies such as AI, which are creating increasing demand for ever more complex semiconductor components. All three of Comet's divisions will benefit from this.

The turnaround in the semiconductor business cycle was confirmed in the first half of 2024, with the recovery likely to accelerate in the second half of the year. This will lead to an increase in investments in semiconductor manufacturing equipment. Comet therefore expects incoming orders to rise in the coming months. In addition, the company expects an overall stable market environment in the traditional automotive, aerospace and security sectors. Despite this favorable market environment, numerous challenges remain for the global economy.

Comet has emerged stronger from the correction in the semiconductor cycle and is prepared for the current upswing. Based on the above assumptions, Comet expects a significantly better result for the 2024 financial year than in the previous year and confirms its guidance of net sales in the range of CHF 440 million to CHF 480 million and an EBITDA margin in the range of 15.0% to 17.0%.

– end –

Webcast / conference call for media, analysts, and investors

The detailed half-year results will be presented in an audio webcast / conference call in English on July 31, 2024, at 10:30 a.m. CEST.

Dial-in numbers:

+41 (0) 58 310 50 00 (Europe)
+44 (0) 207 107 0613 (UK)
+1 (1) 631 570 5613 (USA)
For other countries: LINK 

Webcast: LINK

Definition of alternative performance measures (APM)

Earnings before interest, taxes, depreciation, and amortization (EBITDA): Operating income as per consolidated statement of income before depreciation on property, plant and equipment & right-of-use assets, amortization of intangible assets and impairment losses.
EBITDA margin: EBITDA as a percentage of net sales.
Equity ratio: Total equity attributable to the shareholders of Comet Holding AG divided by total assets.
Free cash flow (FCF): Sum of net cash flows from operating and investing activities.
Book-to-bill ratio: Ratio of orders received to the amount billed for a specific period.

Comet Group
The Comet Group is a globally leading, innovative technology company based in Switzerland with a focus on plasma control and x-ray technology. With premium high-tech components and systems, we enable our customers to both enhance the quality of their products and make their manufacturing more efficient and eco-friendlier. Our innovative solutions are in demand in the semiconductor and electronics market, the aerospace and automobile industry and in security inspection. Headquartered in Flamatt, Switzerland, the Comet Group has a presence in all world markets. We employ more than 1,600 people worldwide, including about 600 in Switzerland. Besides production facilities in China, Denmark, Germany, Malaysia, Switzerland and the USA, we maintain various other subsidiaries in Canada, China, Japan, Korea, Taiwan and the USA. Comet (COTN) is listed on the SIX Swiss Exchange.