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Investing.com -- Shares of ASM International (AS:ASMI) ( Euronext (EPA:ENX):ASM) fell by 1% despite the company reporting first-quarter sales that slightly exceeded market consensus.
The company announced Q1 sales of €839 million, marginally surpassing the Visible Alpha consensus (VA css) of €836 million. The uptick in revenue was attributed to robust demand related to artificial intelligence, particularly in logic/foundry and DRAM High Bandwidth (NASDAQ:BAND) Memory (HBM), although other market segments showed lackluster performance.
In the first quarter, ASM’s bookings were reported at €834 million against the consensus of €830 million. The book-to-bill ratio improved to 1.0x, bolstered by significant orders for Gate-All-Around (GAA) 2nm technology and solid sales in China. The normalized gross margin (GM) was notably higher at 53.4%, compared to the consensus estimate of 48.9%, due to a favorable product and customer mix.
The normalized earnings before interest and taxes (EBIT) margin reached 32.3%, translating to an EBIT of €271 million, which was 17.7% higher than the consensus estimate of €230 million. This increase was attributed to the improved gross margin and a continued moderation in selling, general, and administrative expenses (SG&A).
However, ASM’s normalized net profit was €192 million, falling 2.5% short of consensus figures. The company’s backlog decreased quarter-over-quarter by 3% to €1,515 million. Free cash flow (FCF) was significantly above consensus at €264 million, compared to the VA css of €88 million.
Looking ahead, ASM revised its guidance for the fiscal year 2025, reflecting changes due to recent foreign exchange volatility and the company’s revenue exposure to the US dollar. ASM now projects revenue growth of 10-20% at constant currency (CC) for FY25, with a higher likelihood of achieving the lower end of this range.
For the second quarter, the company expects revenue to grow by 1% to 6% quarter-over-quarter at CC. Additionally, ASM anticipates the FY25 gross margin to be in the upper half of the 46-50% target range. The revised guidance suggests a potential 2-12% reduction in consensus FY25 EBIT due to foreign exchange impacts.
ASM International’s valuation has become more attractive, trading at 15.5 times its pre-cut 2025 EV/EBITDA, which is near the lower end of its historical five-year range. This valuation indicates that market expectations may have already adjusted for the anticipated foreign exchange headwinds.
In other developments, ASM announced that its previously declared share buyback program of up to €150 million is set to commence on April 30, 2025.
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