Sensirion Holding AG: Broad-based return to growth, confirmation of full-year guidance 2024

 
Broad-based return to growth, confirmation of full-year guidance 2024

 

The first half of the year closed with sales of CHF 128.0 million. This represents an organic revenue increase of 8.9 % in local currencies and 3.9 % in Swiss francs compared to the same period
last year. Growth was driven by the automotive and industrial markets, whereas year-on-year sales comparisons in medical and consumer are impacted by ongoing de-stocking effects. The operating
result was significantly impacted by the discontinuation of Sensirion condition monitoring activities in Berlin. Adjusted for these one-off effects, the gross margin amounts to 47.5 % and the
adjusted EBITDA margin is 4.6 %.

 

Key figures

 

Consolidated, in millions of CHF	1 January – 30 June 2024	1 January – 30 June 2024, adjusted*	1 January – 30 June 2023
Revenue	128.0	128.0	123.2
Gross profit	59.6	60.8	69.4
– as % of revenue	46.6%	47.5%	56.3%
Operating profit (loss)	(31.4)	(2.8)	2.9
– as % of revenue	(24.6%)	(2.2%)	2.3%
Profit (loss) for the period	(36.0)	(2.6)	1.4
– as % of revenue	(28.1%)	(2.0%)	1.2%
Earnings per share (in CHF)	(2.31)	(0.17)	0.09
EBITDA	(22.7)	5.9	10.7
– as % of revenue	(17.7%)	4.6%	8.7%
Cash flow from operating activities	7.2		(1.9)
Capital expenditures	(22.8)		(17.6)
Free cash flow	(15.5)		(19.6)
	As of 30 June 2024		As of 30 June 2023
Net cash (Net debt)	38.6		101.8
Number of employees (FTE)	1’235		1’251

*Adjusted for non-recurring effects of CHF 28.6 million at EBITDA level and CHF 33.4 million at net profit level. In the year under review, these
resulted from the closure of the condition monitoring activities at Berlin site (formerly AIsight).

 

The first half of 2024 was challenging for Sensirion, but the overall performance was largely in line with expectations. The company recorded solid growth in some of its end markets, such as
automotive and industrial, thanks to new business and a partial recovery in demand. In the medical and consumer markets, however, demand remained subdued as a result of ongoing inventory reductions
and the weak economic climate in general. Growth in total revenue in the first half of the year was therefore modest, as expected. Combined with the high fixed costs of our products and our
sustained high level of investment in R&D, this culminated in a further period of lower profitability.

Short-term visibility remains limited due to ongoing geopolitical and macroeconomic challenges. Based

on the first half of the year, Sensirion is confirming its guidance for 2024 as a whole. The medium- and long-term outlooks remain positive. This optimism is driven by a robust pipeline of new
businesses for the coming years and growing megatrends such as energy efficiency, climate change and health, which are being supported by its sensor solutions.

 

Broad-based return to growth

 

The first half of the year closed with sales of CHF 128.0 million. This represents an organic revenue increase of 8.9 % in local currencies and 3.9 % in Swiss francs compared to the same period
last year. The operating result was significantly impacted by the discontinuation of the condition monitoring activities in Berlin, which Sensirion will describe in detail below. Adjusted for these
one-off effects, the gross margin stands at 47.5 %, which is within the expected range but below historical levels. This is partly due to the continued underutilization of production capacities in
component manufacturing, where the proportion of fixed costs is higher. The higher sales proportion of lower-margin modules is also reducing the gross margin. The productivity enhancement measures
introduced in the factories and other areas earlier this year are progressing as planned and are expected to start yielding some improvements in the second half of the year.

The adjusted EBITDA margin is 4.6 %. At the operating level, there was an operating loss (EBIT) of CHF 2.8 million, resulting in an adjusted net loss of CHF 2.6 million for the period. On a
positive note, operating cash flow (CHF +7.2 million) was higher than in the same period last year.

 

Discontinuation of condition monitoring activities

 

Alongside its growth projects, Sensirion remains fully focused on improving cost efficiency. The company is consistently pursuing its optimization program and has subjected all ongoing research and
development projects to a critical review. On the basis of this assessment, Sensirion decided to discontinue the activities in the condition monitoring segment and close the Berlin site (formerly
AiSight), as announced back in April 9^th, 2024. Sensirion acquired the Berlin start-up AiSight in September 2021 with the goal of becoming a leading provider of complete solutions in the
field of condition monitoring. However, despite thorough due diligence before the acquisition, it became clear that the condition monitoring market is developing much more slowly and is more
fragmented than initially assumed. There are a large number of competitors, which would make it difficult for Sensirion to differentiate itself in terms of technology. This market structure does
not align strategically with Sensirion goal of becoming a leading provider in each sector through innovation. Therefore, the decision was made to withdraw from this development area on the basis of
the reassessment, but Sensirion remains committed to its strategic goal of building a data-driven service business alongside the important OEM business. For now, Sensirion is focusing on the
detection of environmentally harmful methane leaks in the oil and gas industry. This internal, data-driven innovation project is progressing well and is also set to benefit from new environmental
regulations in the US and Europe.

Innovation always brings both opportunities and risks. For an innovation-driven company like Sensirion, it is therefore crucial to closely monitor innovation projects and act decisively when a
project no longer aligns with expectations. Looking back, many of the Sensirion innovation projects in recent years have been highly successful, such as the environmental sensor initiative and the
A2L campaign that is about to be ramped up. Unfortunately, this was not the case with condition monitoring. Although disappointing, it is part of being an innovation-focused company.

Financially, the decision to discontinue the activities in Berlin will result in an extraordinary impairment of CHF 28.6 million at EBITDA level and CHF 33.4 million at net profit level. CHF 30.4
million of this consists of non-cash impairments, which includes CHF 25.6 million for goodwill recycling as required under Swiss GAAP FER and CHF 4.8 million due to the write-off of tax loss
carryforwards. The remaining amount of approximately CHF 3.0 million is attributable to restructuring costs. All extraordinary expenses have been fully charged to the income statement for the first
half of the year and adjusted for comparative purposes. The deconsolidation has no significant impact on sales as the Berlin activities were still in the start-up phase.

 

Solid growth in the automotive and industrial markets; significant slowing effects

in the medical and consumer markets

 

The automotive market continues to record strong revenue growth and ended the first half of the year

with sales of CHF 39.8 million (+14 % year-on-year). This growth is mainly due to new module projects as a Tier 1 supplier for European OEM customers. The existing business as a Tier 1 supplier,
along with the Tier 2 component business, remained solid but did not experience any significant growth momentum.

The medical market sales declined by 42 % to CHF 18.3 million compared to the same period last year. This was mainly due to two factors: firstly, the medical market continues to be affected by
ongoing

inventory reductions in both the CPAP and ventilator segments after the strong and turbulent period

of 2020 to 2022. Sensirion expects this phase to last until the end of 2024. Secondly, the sales volume in the previous year was unusually high due to a temporary surge in demand for ventilator
sensors from China after local Covid restrictions were lifted.

The broadly diversified industrial market is showing a promising recovery after the dip in sales in 2023.

At CHF 63.5 million, sales were up by 31 % on the same period last year, due to the recovery in demand for air purifiers after strong corrections in 2023. The inventory corrections in the air
purifier segment appear to be largely complete. Despite this, Sensirion does not expect the growth momentum to be as strong in the second half of the year. Growth was additionally bolstered by the
first moderate revenue contributions from the A2L leakage sensors used in air conditioning systems across North America. The A2L business is expected to make an increasing contribution to revenue
growth in the second half of the year and beyond. The performance of the other sectors in the industrial market was varied. While gas metering recorded further growth due to new projects in
European countries, the cyclical semiconductor business saw a decline.

The consumer market, which tends to be more cyclical, has shown few signs of recovery so far. At CHF

6.3 million (−22 % year-on-year), half-year sales came in slightly below the already subdued figures of

the second half of 2023. This was due mainly to the weak economic conditions in general and the

unresolved inventory situation in this highly fragmented end market. Sales were also impacted by the

persistently weak distribution business.

 

Medium- and long-term guidance remains positive

 

Despite the challenging market environment at present, Sensirion remains positive about the medium- and long-term future. Sensirion continues to receive strong support from megatrends such as
energy efficiency, climate change and health, which are accelerating the increased use of sensors in a wide range of applications.

Sensirion also has a full pipeline of promising new customers and design-in projects in all markets.

As mentioned in the last report, the start of production for two important new projects acts as a further catalyst for growth in the second half of the year. Alongside the further ramp-up of a
particulate matter (PM2.5) project in the automotive sector, Sensirion is working intensively on a new product family of gas leakage sensors for air conditioning systems in the US market. A new
refrigerant class for air conditioning systems will be introduced in the US in 2025, covering coolants that are less harmful to the climate but more flammable. This opens up new opportunities for
Sensirion to introduce innovative leakage sensors in this market. The production preparations are on track and Sensirion expects this new sensor class to start making a meaningful contribution to
revenue in the second half of 2024.

A technological milestone was reached a few months ago with the official announcement of an innovative, chip-based CO₂ sensor. As one of the world’s smallest sensors for measuring carbon dioxide
directly, it enables various new applications for monitoring indoor air quality that were previously not feasible due to size and cost constraints.

As part of our third strategic focus area – securing promising core technologies as a basis for long-term

growth – we participated in the capital increase of Lumiphase AG, in which Sensirion holds a stake of almost 50 %. This promising company is developing a new optical, CMOS-compatible photonics
technology using novel materials and has made excellent progress since its foundation in 2020.

Sensirion is planning another Capital Markets Day at our headquarters in Stäfa in November 2024, at which the company will provide a detailed strategy update and an overview of the strategic
progress Sensirion has made so far. As part of the long-term capacity and growth planning, Sensirion managed to secure two key plots of land in Stäfa after a lengthy search. This will preserve our
long-term growth opportunities in the area and will allow the company to continue benefiting from the proximity of R&D and operations in the field of MEMS, a factor that is crucial for
innovation. Sensirion acquired the first plot of land in January of this year, directly adjacent to the headquarters, and the company is planning to expand our cleanroom and production capacities
there.

The second plot has been acquired from the municipality, although Sensirion has not been able to take possession of it yet due to regulatory issues.

 

Changes at Executive Board level

 

After 16 years with Sensirion, 11 of which on the Executive Board, Andrea Orzati (VP Sales) has decided to pursue a new challenge outside the company. He will be replaced by Simon Sonderfeld on
November 1, 2024. Furthermore, the CFO Matthias Gantner is retiring on December 31, 2024. He will be succeeded by Martin Wirz, who has been with Sensirion for over 11 years, covering various
leadership roles.

 

Confirmation of full-year guidance 2024

 

With regard to the full-year guidance for 2024, Sensirion confirms the full guidance as of March 2024.

 

Although the market environment remains challenging, Sensirion anticipates a return to growth in 2024,

primarily due to the commencement of new projects. The new business in gas leakage sensors for air conditioning systems is expected to make a significant contribution to this growth, especially in
the second half of the year. Regarding our existing business, Sensirion remains cautious and anticipates only a modest recovery this year due to ongoing inventory adjustments and the weak economic
climate in general. Sensirion expects the positive growth momentum from the first half of the year to level off, especially in the appliance market.

Despite the return to growth, 2024 is expected to be a transition year in terms of profitability. The larger proportion of lower-margin module business, combined with the continued underutilization
of capacities in component manufacturing, will result in a lower gross margin in 2024.

Based on this assessment, Sensirion is confirming our guidance for 2024 as a whole: assuming a smooth

ramp-up of the growth projects and stable exchange rates, Sensirion expects consolidated sales in 2024 to remain in the range of CHF 250 to 280 million (FY 2023: CHF 233.2 million). This
corresponds to the projected organic growth of 7 % to 20 % compared with 2023. The adjusted gross margin for 2024 is expected to lie between 47 % and 49 %. The adjusted EBITDA margin will
consequently improve to 5-10 % (FY 2023: 4.3 %).

 

Conference call on the half-year 2024 results

Today, Wednesday, August 21, 2024, at 10:00 am CEST (8 a.m. GMT/4 a.m. EDT), a conference call on the half-year 2024 results will be held. The presentation will be held in English.
Participants will have the opportunity to ask questions during the telephone conference following the presentation.

 

Please register for the conference call using the following link

https://register.gotowebinar.com/register/8409008195257909592

 

Documentation

All documents will be available at
https://sensirion.com/company/investor-relations/results-reports/ on August 21, 2024 from around 06:30 CEST.

 

Financial calendar

March 11, 2025  Full-year results and annual report 2024

May 12,  2025  Annual General Meeting 2025

 

Contact

 

Investor relations 

Lars Dünnhaupt 

Director of Investor Relations 

Tel.: +41 44 306 40 00 

Email: [email protected] 

 

About Sensirion Holding AG

Sensirion Holding AG (SIX Swiss Exchange: SENS), headquartered in Stäfa, Switzerland, is a leading manufacturer of digital microsensors and systems. The product range includes environmental sensors
for the measurement of humidity and temperature, volatile organic compounds (VOC), carbon dioxide (CO₂) and particulate matter (PM2.5), gas and liquid flow sensors, differential pressure
sensors as well as gas leakage sensors.

An international network with sales offices in China, Europe, Japan, South Korea, Taiwan and the USA supplies international customers with standard and custom sensor system solutions for a vast
range of applications. Sensirion sensors can commonly be found in the automotive, medical, industrial and consumer end markets. For further information, visit www.sensirion.com.

 

 

 

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End of Inside Information

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Information and Explanation of the Issuer to this News:

Disclaimer

Certain statements in this document are forward-looking statements, including, but not limited to, those using words such as “believe”, “assume”, “expect” and other similar expressions. Such
forward-looking statements are based on assumptions and expectations and, by their nature, involve known and unknown risks, uncertainties and other factors that could cause actual results,
performance or achievements to differ materially from those expressed or implied by the forward-looking statements. Such factors include, but are not limited to, future global economic conditions,
changing market conditions, competition from other companies, the effects and risks of new technologies, the costs of complying with applicable laws, regulations and standards, diverse political,
legal, economic and other conditions affecting the markets in which Sensirion operates and other factors beyond the control of Sensirion. In view of these uncertainties, you should not place undue
reliance on forward-looking statements. Sensirion disclaims any intention or obligation to update any forward-looking statements or to adapt them to future events or developments.

 

Sensirion uses certain key figures to measure its performance that are not defined by Swiss GAAP FER. These alternative performance measures may not be comparable to similarly titled measures
presented by other companies. Additional information on these key figures can be found at
www.sensirion.com/additional-performance-measures.

 

This document is not an offer to sell, or a solicitation of offers to purchase, any securities.

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Language:	English
Company:	Sensirion Holding AG
	Laubisrütistrasse 50
	8712 Stäfa
	Switzerland
Phone:	+41 44 306 40 00
Fax:	+41 44 306 49 06
Internet:	www.sensirion.com
ISIN:	CH0406705126
Valor:	A2JGBW
Listed:	Regulated Unofficial Market in Berlin, Frankfurt, Munich, Stuttgart; SIX Swiss Exchange
EQS News ID:	1971727

End of Announcement	EQS News Service

1971727  21-Aug-2024 CET/CEST