Returning to growth after a transition year

Ad hoc announcement pursuant to Art. 53 LR

Full-year 2023

• Net sales declined by 32.2% to CHF 397.5 million (FY22: CHF 586.4 million)
• EBITDA margin of 11.3% compared to 20.3% in FY22
• Return on capital employed (ROCE) at 6.6%, down from 26.3% in the previous year
• Turning point in the semiconductor cycle reached in Q4/23
   

Outlook for 2024

• Semiconductor production equipment spend anticipated above prior-year levels
• Gradual improvement of market environment expected over the course of the year
• Focus on selective investments into growth and efficiency
• Outlook: Net sales of CHF 440 million to CHF 480 million, EBITDA margin of 15.0% to 17.0%

2023 was a very challenging and eventful year economically, to which Comet was not immune. Above all, the company was affected by the correction in the semiconductor cycle. The correction was exacerbated by the slow reduction of inventories in the value chain. In contrast to the semiconductor industry, other important markets for Comet, such as the automotive, aerospace and security industries, proved robust, although a softening was observed in some segments in the second half of the year.

Comet experienced a decline in net sales of 32.2% from the prior-year level to CHF 397.5 million (FY22: CHF 586.4 million). EBITDA operating earnings fell by 62.2% to CHF 45.0 million (FY22: CHF 118.9 million) with a margin of 11.3% (FY22: 20.3%). Net income was also lower compared to the previous year, with CHF 15.4 million or CHF 1.98 per share (FY22: CHF 78.1 million, CHF 10.05 per share). Free cash flow fell from CHF 42.2 million in the year before to a slight deficit of CHF 0.6 million due to the lower EBITDA. The equity ratio of 62.5% and a debt factor (ratio of net debt to EBITDA) of 0.2 testify to Comet’s continuing healthy financial condition.

PCT: Increased resilience to correction, driving forward the market launch of Synertia^®

Triggered by the correction in the semiconductor cycle microchip manufacturers scaled back their investments in semiconductor production equipment. The resulting lower demand for PCT’s components and services had a strongly negative impact on the Plasma Control Technologies (PCT) division. To mitigate the impact of the industry correction on earnings, the division adapted the organization to the lower demand. To ensure the company’s readiness for the next upturn in the semiconductor cycle, all measures taken in this context were implemented with particular care.

Improving its structural positioning, PCT completed the consolidation of its sites in San Jose, California. The plans for the further expansion of the site in Penang, Malaysia, continued to progress. Comet has secured land at this location for a new building that is currently in the planning.

The market launch of the Synertia^® RF power delivery platform, the important new growth driver, is advancing further. A first design win with a Tier 1 customer in 2023 and over 50 active collaborations with existing and potential customers are evidence of the keen and broad-based interest that the platform is attracting in the market.

In 2023, sales of the PCT division fell by 49.4% to CHF 193.2 million, from CHF 381.4 million in the prior year. The measures taken to adjust the cost structure were not able to fully cushion the impact on profitability. Operating earnings at EBITDA level were 82.2% lower year-over-year at CHF 18.7 million (FY22: CHF 104.9 million). The EBITDA margin was thus 9.7% (FY22: 27.5%).

IXS: Entering new realms with solution developed for the inspection of semiconductors

The X-Ray Systems division (IXS) was able to deliver on the turnaround plan despite the general slowdown in economic activity. The declining economic momentum in the face of rising inflation rates and of global conflicts negatively affected the growth of the division's industry over the course of the year. Nevertheless, in 2023, IXS received significant orders from well-known manufacturers of electric cars for the inspection of batteries, as well as orders from semiconductor manufacturers. The realignment of the system portfolio toward these two growth industries is gaining speed.

However, the pivot into the sector is not yet complete, which is why the less profitable volume business still accounts for a significant proportion of the division's earnings. As a major step in the repositioning of the division, IXS released the CA20 inspection solution during the year. The new system is optimized for semiconductor applications in terms of stability, imaging, precision, and maintenance requirements, and takes 3D x-ray technology for the semiconductor advanced packaging industry to a whole new level.

Sales in 2023 declined by 10.3% to CHF 117.0 million (prior year: CHF 130.4 million), while at the same time, due to lower costs, EBITDA improved by 206.4% to CHF 4.9 million, compared to CHF 1.6 million in the previous year. The EBITDA margin thus increased from 1.2% to 4.2%.

IXM: Record sales validate the division’s strategy, 50% of sales growth with new products

The X-Ray Modules (IXM) division achieved the highest sales in its history, in a favorable market environment that, however, weakened slightly toward the end of the year. In addition to benefiting from positive market conditions, IXM was able to process a backlog of orders that had been delayed by bottlenecks in the supply chain. The share of sales from new products was successfully increased compared to the previous year and now accounts for more than 50% of sales growth. The division thus reaped the rewards of its investments in the past few years.

The existing technology gaps in solutions for in-line inspection create excellent market opportunities for IXM’s newly launched products, particularly in Asia. The division therefore further increased its presence in Asia to be as close as possible to developments and players in the semiconductor and electronics market. A local sales and support team was put in place to serve the South Korean battery market, and the commercial organization in Japan and China was expanded.

In 2023, sales of the IXM division grew by 13.1% to CHF 100.3 million (FY22: CHF 88.6 million). EBITDA improved by 51.9% to CHF 23.8 million (prior year: CHF 15.7 million), corresponding to a margin of 23.8% (FY22: 17.7%).

Dividend

At the Annual Shareholder Meeting scheduled for April 19, 2024, the Board of Directors will propose a dividend of CHF 1.00 per share (FY22: CHF 3.70). This represents a distribution of 50.5% of the Group’s net income (FY22: 36.8%).

Outlook

After facing a significant correction during the first nine months of 2023, the semiconductor market showed signs of stabilization and even growth in certain segments by the year's end. This shift is underpinned by a modest upward trend at the beginning of the 2024 financial year, driven by an improving supply and demand balance, which is likely to accelerate in the second half of the year. The industry's recovery is anticipated to boost new orders for wafer fabrication equipment manufacturers, benefiting Comet as their supplier. Meanwhile, traditional industries like automotive, aerospace, and security are expected to remain generally stable in fiscal year 2024.

In this favorable market environment, the major challenges facing the global economy remain a source of uncertainty. Eventhough inflation is expected to be lower than in 2023, it will continue to put pressure on consumers and companies, and geopolitical tensions and trade conflicts are likely to persist. The development of the global economy therefore remains unclear.

Comet is emerging stronger from the correction in the semiconductor cycle and is prepared for the approaching upturn. Under the above assumptions, Comet expects a significantly better financial year 2024 compared to the prior year with net sales in a range of CHF 440 million to CHF 480 million and an EBITDA margin range of 15.0% to 17.0%.

–end–

Media and analysts’ conference

The detailed annual figures will be presented today March 4, 2024, at a media and analysts' conference at 1:30 p.m. CET in Zurich, Switzerland (Widder Hotel, Zunft Stube, Rennweg 7, CH- 8001 Zurich).

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 click here 

Webcast (link):
English, March 4, 2024, 1:30 p.m. CET:
Link to webcast

For more information, please refer to our online Annual Report available at:
Link to annual report 2023

Annual General Meeting 2024
Comet will hold the Annual General Meeting of April 19, 2024, with physical presence of shareholders in Berne, Switzerland. Further details will follow with the invitation to the meeting.

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-friendly. 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 1,500 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.