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Management Interview

We are on a very promising path.

In view of the COVID-19 pandemic, we have not carried out a Management Board photo shoot this year and instead are making use of existing photo material.

The financial year 2019/20 is behind us. Looking back, how did it develop overall?

Andreas Gerstenmayer Operationally, we can be quite satisfied. We dealt with the issues we intended to address. We made progress on the implementation of our strategy and our plants are well on track. In terms of volume, our capacity was not utilised to the extent planned, but I think we used the year well to prepare for future challenges. Economically, we certainly did not meet all our goals. However, we were also faced with a challenging operating environment. In the automotive sector, uncertainties about the future of the powertrain dampened demand. The trade conflict between the USA and China continued, though at a lower level. And European industry investment behaviour remained at an unexpectedly weak level. On top of that, we saw the outbreak of COVID-­19 in the final quarter, which forced us to temporarily close plants in China.

What does that mean in terms of actual figures?

Monika Stoisser-Göhring That we fell short of expectations on the earnings side. We surpassed the one-billion-euro revenue mark once again. However, revenue was 2.7% lower than in the previous year. At least the EBITDA margin, at 19.4%, was within our adjusted target corridor of 18 to 20%. Earnings per share amounted to € 0.34 after interest on hybrid capital, which was significantly lower than last year. Along with unexpectedly difficult market conditions, this was also due to the intense prep­ aration for the strategic expansion of our business.

Andreas Gerstenmayer At the beginning of the fourth quarter, we were still confident in the Management Board that we would meet our guidance for revenue and earnings. And we have done everything possible in the last few months to achieve this goal. In particular, we reacted very rapidly to COVID-­19. Wherever we could influence something, we did. I even think that we were able to keep the economic impact low due to our measures. This could well have ended very differently. We were among the first companies, if not the first, to resume production. At our Chongqing I plant we never stopped production, even with all the official measures imposed.

Despite low earnings figures you are planning to pay out a dividend again this year.

Monika Stoisser-Göhring That’s correct. Against the background of the solid business development, we will propose a dividend of € 0.25 per share to this year’s Annual General Meeting, together with the Supervisory Board. Even though the current market situation is currently rather unclear due to the exceptional circumstances. And because we are deeply convinced that based on our position and the course we are pursuing, we are excellently prepared for the future.

Monika Stoisser-Göhring


"We are deeply convinced that based on our position and the course we are pursuing, we are excellently prepared for the future."

How are AT&S’s activities in the strategic areas 5G, IC substrates and big data developing?

Andreas Gerstenmayer We made considerable progress in all three areas. In the area of 5G we used to focus primarily on mainboards for mobile devices. We now have the first contracts for printed circuit boards for modules and are discussing topics such as 5G base stations and antenna technology with infrastructure providers. That means that we can address significantly more applications today than even a year ago. In the area of IC substrates, we made major investment decisions and created the basis enabling us to be present in precisely those markets that will grow in the coming years. This is also underscored by the decision to build Chongqing III. We will be able to produce large volumes of the latest technologies very soon. And thanks to our strength in the area of IC substrates, we are also in a good position for big data. As data volumes explode, we will see very attractive jobs in the years to come.

Which industries will be the first to recover from the crisis?

Andreas Gerstenmayer Similar to the damage in the industries, it is also very difficult to estimate which sector will be the first to bounce back: will it be capital goods or rather consumer goods? One thing we can perhaps say is that anything related to infrastructure will pick up sooner. This is because, from experience, states deliberately provide impetus in these areas to reduce unemployment, increase purchasing power and ultimately boost the economy again.

Heinz Moitzi We can also assume that the topic of 5G will gain momentum: we are currently experiencing how fast people get used to digital communication in everyday business. For many employees, working from home and video conferences did not even feature as a topic only a few months ago. Today they use these tools as a matter of course – with all the restrictions this entails. One thing has become clear: today’s network infrastructure is not at all sufficient for digital working. This will be the next big push.

"Today’s network infrastructure is not at all sufficient for digital working." Heinz Moitzi

The automotive industry has been particularly hard hit by the shutdown. How do you see this situation from the angle of AT&S?

Andreas Gerstenmayer This is another area where it is difficult to assess how strong the impact is – and to what extent we will be affected at the end of the day. But we definitely assume that there will be effects. In the car market in particular, we will have to watch the development very carefully in the coming months. This is a market with a complex supply chain, which has recently ground to a halt. I think that this segment will tend to take longer to recover.

Have you adapted or sharpened your strategy at all in view of COVID-19?

Andreas Gerstenmayer We have worked very intensively on our strategy over the past few years. We are sure that the topics we aim to implement as part of our mid-term strategy are still valid. I don’t see any aspect in any of our strategic focus areas that would make the topics obsolete. On the contrary: the trends we see are sustainably intact. Only in terms of timing there may be delays in one place or another due to the extraordinary situation the global economy is facing.

"Our equity ratio is very solid at 41% and our debt repayment period – at 1.3 ­years – is significantly below our self-imposed maximum of three years." Monika Stoisser-Göhring

And with respect to the economic positioning – do you see any need for adjustment?

Monika Stoisser-Göhring No. AT&S continues to be very stable economically: our equity ratio is very solid at 41% and our debt repayment period – at 1.3 years – is significantly below our self-imposed maximum of three years. In terms of investments, everything is consistent with our plans; because of changes in the content of our projects, we spent around € 90 million less in the past financial year than originally budgeted. In accordance with our scheduling, we were able to largely finance our investments from our own resources in the past financial year. Should we actually require additional funds for our projects, we have different options. It goes without saying that we put a particular focus on costs in times like these. As a precaution, but also because we still aspire to serve the main part of our capital requirements for our projects from our cash flow.

Ms Stoisser-Göhring, you recently received the CFO Award. That proves that you do many things right ...

Monika Stoisser-Göhring It shows that AT&S does many things right. Within the Management Board we act based on good cooperation and a shared understanding. Against this background, a lot can be done in finance. I think that finance tools such as hybrid bonds and promissory note loans, which were recently introduced at AT&S, are part of the standard portfolio in modern corporate finance. Starting business relationships with Chinese banks has also been a logical step for us. The vast majority of our non­current assets is based in Asia and we know the market and the mentality of its people well. By working together in finance we gain important trust, not only among the banks.

To what extent will the changed market situation bring new opportunities for AT&S, for example in medical technology?

Andreas Gerstenmayer Of course we look at the markets differently in a changed situation and check out additional opportunities, also in the medical sector. We have to admit, however, that many of the things which are in great demand right now use standard technologies that we very deliberately did not address in the past. But of course we are also looking for ways to help in the current situation. This is why we are now producing components for local medical technology manufacturers at our plant in India despite the shutdown.

Advanced applications, for example for pacemakers, hearing aids or insulin pumps, continue to be very interesting for us. This is where our future market lies, and consequently we are focusing on this market with our comprehensive technology upgrade at our plant in Ansan, South Korea.

With the investments in Ansan and, above all, in Chongqing, AT&S is opening the door to its second billion in revenue. Where will your employees come from?

Monika Stoisser-Göhring That is a demanding task, especially since it is important to recruit employees with the appropriate skills. We need people who deal with the technical side of megatrends such as autonomous driving and digital networking. To bring these people on board, we have set up the “Talent Mapping” project. We have defined the expertise we will need in the future within this project so that we can now address professionals in areas like microelectronics, RF/IC design, chemistry and physics in a targeted manner. The project will be accompanied by an international talent programme, through which we send graduates of technical studies to China for a period of time after they have completed a year of training with us.

The young generation nowadays increasingly chooses employers based on their value profile ...

Monika Stoisser-Göhring That is a good thing, because values are also important to us. We believe that a stable foundation of values is a necessary prerequisite for long­ term success. That is why we put a strong focus on topics such as sustainability, governance and diversity and set ambitious targets: for example, we aim to raise the share of women from 21% today to 30% by 2025.

Heinz Moitzi In our production, we are already operating at a high level in terms of environmental matters and work safety. But we also see room for improvement in this area: we aim to cover 80% of our energy supply with renewable energies in the future. And we are planning a life cycle assessment for our product groups in the future.

You are also entering aerospace technology now. What are the prospects in this segment?

Heinz Moitzi This has evolved over the last few years and shows that we can keep adding “new” segments to our core business. We have acquired a very demanding certification (NADCAP) which is required for supplying the aerospace industry, because we are aware that part of the communication infrastructure also goes into space. We have learned that our technologies can help these industries to cost­effectively implement miniaturisation and weight reduction, which are increasingly gaining importance in this segment, too.

Andreas Gerstenmayer In this context, the 5G development should also be mentioned. How will network providers cost­effectively reach those who do not live in conurbations in the future? At the end of the day, it will only be possible using satellite technology. Communication satellites, transmission stations, antenna technology, satellite launches – we can make a small, but important contribution with our solutions in all of these areas.

Andreas Gerstenmayer


"Communication satellites, transmission stations, antenna technology, satellite launches – we can make a small, but important contribution."

Europe is occasionally said to have a need to catch up as a location for innovation. To what extent does that limit AT&S in its development?

Heinz Moitzi I would not quite put it that way that Europe lags behind other continents. Working on electronic innovation is a global business for a company of our size today. Thanks to its global positioning, AT&S can combine the advantages of Asia, the USA and Europe well. We collaborate with universities and electronics institutions on different continents: in Germany, for example, we work with the Fraunhofer Institute and in the USA with the International Electronics Manufacturing Initiative (iNEMI), and of course we also collaborate with Austrian universities. On top of that, we work very closely with our customers in development.

Industrial production is where Europe has a need to catch up: a region which only does research but has no production is blind on one eye. However, the EU has now realised that and is promoting basic technologies again. This creates the basis for bringing back some parts of the supply chain, after it moved to Asia around the turn of the millennium. As digitalisation increases, cost differences can be balanced out better in Europe. Here, AT&S is already in a very good position. Leoben has been, and will remain, a central location for us as a production site and research centre for special applications.

What new technological potential do you see for the future?

Heinz Moitzi First of all, let me say that AT&S is moving in technology segments today that we could only dream of even a few years ago. And our development is rapidly progressing. Let’s take miniaturisation for example: Today we operate in the range of trace widths of 10μm and with more than 1,000 laser drillings per second, with a diameter of 40μm or less. In some areas we are already advancing to the nano segment, getting in close contact with semiconductors. That means that we are currently on the threshold to new technological territory. Developing the appropriate technologies for this is a demanding job. But it has always been one of AT&S’s skills to see what needs to be done and develop the right solutions. Where possible, we do this on our own, and where useful, we collaborate with partners.

Heinz Moitzi


"It has always been one of AT&S’s skills to see what needs to be done and develop the right solutions."

COVID-19 has put the industry in crisis mode over night. How did the crisis management work out at AT&S?

Andreas Gerstenmayer I think we can pay a huge compliment to all our teams at all locations. In China, we managed to at least produce at one plant, even during the peak of the crisis – even if it was not with the full staff. We were also able to restart operations at the other plants after a relatively short period of time. While other factories were still shut down, we were able to produce significant volumes again.

Heinz Moitzi What helped us was that we had been properly sensitised after SARS in 2003. We responded quickly and took initial measures in December and were able to cope with a variety of issues based on sophisticated crisis management within a very short period of time: implementing safety concepts, reorganising logistics and meeting official requirements. The well-coordinated processes helped us not only in China, but also in India, South Korea and Austria. At no time did we have problems with protective masks and to this day we don’t know of a single infection in our company.

Sounds almost easy ...

Heinz Moitzi Of course it was not quite that easy. What I mean to say is that the critical topics were not so much the processes at our production sites – we managed to create the appropriate framework conditions very quickly at the workplaces and in the canteens. Supply chain topics, for example, were more challenging. If you want to set up machines while travel restrictions are in place and service technicians have to undergo quarantine for safety reasons, no manual will have the advice you need, but you have to find effective solutions fast.

The year 2020/21: How is AT&S approaching the current year? Can the medium-term forecast be maintained in the current situation?

Andreas Gerstenmayer In 2020/21 we will have to “drive by sight” and permanently review our assumptions – at monthly rather than quarterly intervals. With COVID-19 we are currently learning in the global economy that things can literally change over night. But this situation does not mean that we will reduce capacity in production or discontinue our future programmes. From today’s perspective our strategy is intact and sufficiently robust to support the medium­term guidance: doubling revenue with an EBITDA margin of 25% to 30%.

As responsible entrepreneurs, we of course have to review this again and again, and make decisions: are our key indicators still correct or do we have to make adjustments? What we can do right now is to get through the current phase as well as possible. To this end, we are very restrictive on current spending. At the same time, we keep driving our strategic projects for IC substrates and modules.

"From today’s perspective our strategy is intact and sufficiently robust to support the medium-term guidance: doubling revenue with an EBITDA margin of 25% to 30%." Andreas Gerstenmayer