- Fourth quarter sales rise over 28%
- €7.2 billion returned to shareholders in 2022
- Company sees continued growth out to 2030
Netherlands-based semiconductor equipment firm ASML (ASML:AMS) delivered a solid fourth-quarter and full-year report and predicted sales could rise over 25% this year.
The shares, which have rallied more than 50% from their October low of €400, eased 1.5% to €606 on weak sentiment towards technology stocks flowing from the US overnight.
NO SIGN OF A SLOWDOWN
ASML, which makes the lithography machines which make computer chips, posted fourth-quarter sales of €6.43 billion up 28.6% on the same period a year earlier thanks to a surge in net system sales.
The firm splits its sales into new systems and service revenues, so as its installed customer base grows its service revenues rise providing a steady stream of income.
Net system sales came to €4.75 billion in the fourth quarter, 37% more than the same period of 2021, while service revenues increased 10.5% to €1.68 billion.
For the full year, the installed base business - providing services and upgrades to customers - grew 16% to €5.7 billion.
The fourth-quarter gross margin was slightly better than expected at 51.5%, which took the full-year margin to 50.5%, and the firm took in €6.3 billion of new orders of which more than half were for its EUV (extreme ultra-violet) machines, which have a higher margin than those using older DUV technology.
Despite economic uncertainty and rising interest rates, the level of demand for ASML’s products means its customers have to order well in advance.
The firm is expecting first-quarter sales of between €6.1 billion and €6.5 billion compared with €3.5 billion last year, with a gross margin of between 49% and 50% against 49% previously, and full-year sales are seen growing more than 25% from 2022’s €21.2 billion with a ‘slight improvement’ in gross margin from 50.5% last year.
HIGHER RETURNS
At its investor day last November, the company set out a road map to reach between €30 billion and €40 billion of revenues in 2025, or a 65% increase on 2022 taking the mid-point of the range, and between €44 billion and €60 billion of revenues in 2030 or almost three times last year’s figure taking the top of the range.
At the same time, gross margins are seen rising to between 54% and 56% in 2025 and between 56% and 60% in 2030 meaning earnings are going to grow at an even faster clip than sales.
Last year the firm returned €7.2 billion to shareholders through dividends and share buybacks, so with sales potentially trebling and margins rising from around 50% to as much as 60% by the end of the decade the prospects for shareholder returns look very rosy.
