UPDATE: ASML 1Q Pft Strong, Outlook Disappoints
8:51 AM ET April 13, 2005
(This updates an item at 0800 GMT with additional comments from ASML's Chief Executive, analysts and a new share price.)
By Stefan Simons
Of DOW JONES NEWSWIRES
AMSTERDAM (Dow Jones)--Dutch semiconductor equipment maker ASML Holding NV (ASML) Wednesday posted a near fivefold rise in first-quarter net profit on high selling prices, but remained cautious on its own outlook and the outlook for the industry.
"The current slow improvement in semiconductor capacity utilization makes a sharp recovery of the industry unlikely in 2005," ASML Chief Executive Eric Meurice said.
ASML said order intake in the second quarter will be lower than the first quarter, when the company booked orders for 35 systems with a total value of EUR323 million.
This weak outlook weighed on ASML's shares and at 1246 GMT the stock was down 4.4% at EUR11.88, while the benchmark AEX index in Amsterdam was up 0.4%.
"The outlook is far worse than expected," said Petercam analyst Eric de Graaf, who lowered his buy rating to reduce. "The guidance for lower orders in the second quarter reduces hope of a meaningful recovery this year. We were hoping for the first signs of a recovery, but got signs of a prolonged downturn," he said.
ASML posted first-quarter net profit of EUR100 million, up from EUR21 million a year earlier. However, the figure was slightly below analysts' expectations of around EUR105.2 million.
In the first quarter, ASML benefited from rising average selling prices as its customers increasingly choose higher valued machines. The average selling price was EUR10.7 million, 22% above the average price in the last quarter of 2004.
The Veldhoven, Netherlands-based company said the increase in the average selling price will continue in the second quarter of 2004, when it expects to ship 50 machines for an average price of EUR13.3 million.
Effectenbank Stroeve analyst Peter Olofsen said ASML's results weren't a reason to be optimistic. The expected lower order intake in the second quarter "raises doubts about the outlook for 2005," said Olofsen, who rates ASML at hold.
In a conference call, ASML CEO Meurice said that the semiconductor industry cycle is still on the low side. "Although the cycle is low, we are confident of continued profitability in each of the remaining quarters of 2005," he added.
Meurice, who took the helm at ASML on Oct. 1, said second quarter sales will be "significantly higher" than in the first quarter, based on the company's backlog and additional sales derived from service contracts of around EUR55 million.
In the first three months of 2005 ASML shipped 50 new and 9 refurbished machines, resulting in total sales for the quarter of EUR685 million. This compares to sales of EUR453 million a year ago and EUR785 million in the previous quarter.
At the end of March, ASML's order book comprised 107 lithography systems with an average selling price of EUR12.9 million, compared to 131 systems, at the same price, at the end of 2004.
The company said first-quarter gross margin increased to 40%, from 39.2% in the last quarter of 2004, and its order backlog supports a gross margin in the 38-40% range in the second quarter and 36-38% for the third quarter.
ASML didn't give an update on plans to enter the $1 billion market for Liquid Crystal Display equipment manufacturing, having first said it's mulling an entry into that market in January. Meurice said the company will make a decision on entering the market in the second quarter of 2005.
ASML is still seeking commitments for orders and is in talks with major LCD manufacturers. Meurice declined to elaborate on the progress the company is making in getting these commitments. He said the LCD market is currently "very cautious."
Van Lanschot analyst Marc Kennis said the lack of a clear update might point to difficulties in the negotiations between ASML and potential customers on the commitment they are willing to give. "The LCD market just went through a significant downturn in pricing," Kennis said. "Although prices are stabilizing, this might not be right time to commit to huge investments." Van Lanschot rates ASML at buy.
ASML is one of the world's largest makers of lithography systems, which map out electronic circuits on silicon wafers. Its main competitors are Japan's Nikon Corp. (7731.TO) and Canon Inc. (CAJ). |
