Machinery industry VAT with higher earnings - confident outlook
The vacuum valve manufacturer VAT recovered in the past financial year and increased its earnings. Shareholders are to receive an unchanged dividend. The company is quite confident about the outlook and expects a year of growth.
04.03.2025, 06:55
04.03.2025, 07:42
SDA
The bottom line was an 11.3 percent higher profit of 211.8 million Swiss francs, as the company announced on Tuesday. In the previous year, profits fell by almost 40 percent as a result of the general weakness in the semiconductor market. The operating profit EBITDA rose by 8.4 percent to 293.7 million, while the margin of 31.2 percent was within the range already communicated in January. Free cash flow fell slightly by 2.9 percent to 183.2 million.
At the beginning of January, VAT announced a 6 percent increase in sales to 942 million Swiss francs and a rise in order intake of almost 50 percent to 1.03 billion Swiss francs. The first effects of the recovery in the semiconductor market were felt in the fourth quarter, with the order rate continuing to rise compared to the third quarter.
Stable dividend in transition year
The dividend for shareholders will remain unchanged at CHF 6.25 per share. VAT's results were pretty much in line with expectations compared to the AWP consensus and even surprised somewhat positively in terms of profit.
VAT describes the past year as a year of transition. The spread of artificial intelligence (AI) and the ongoing digitalization have contributed to the recovery of the market. However, the expected replacement investments in consumer goods such as smartphones and PCs have yet to materialize. This shows that the semiconductor market is still in a state of transition.
Investment spending in Japanese and Chinese semiconductor factories has already risen sharply, while plans in Europe and South Korea have been postponed. VAT has also postponed some of its investment activity until 2025. However, the investment ratio of 6 percent is still above the target corridor of 4 to 5 percent. Parts of this will also go towards completing the plant in Malaysia, which will already account for 35% of VAT's total production output in 2024.
Confident outlook
Looking ahead, VAT is quite confident. Sales of between CHF 275 and 295 million are expected for the first quarter. By way of comparison, the company achieved sales of 198.5 million in the first quarter of the previous year. Overall, VAT is very well positioned to outperform general market growth both in 2025 and beyond.
The current financial year 2025 is expected to be a year of growth. Accordingly, a year-on-year increase is expected for order intake and sales as well as for EBITDA, the corresponding margin, net profit and free cash flow.
