Comet adjusts full-year guidance after Q3 below expectations

Ad hoc announcement pursuant to Art. 53 LR

Trading update third quarter 2023

• Net sales of CHF 77.7 million in Q3/23, CHF 284.8 million after 9M/23
• Book-to-bill of 0.86 at the end of Q3/23
• Bottom in semiconductor cycle reached, slight recovery expected in Q4/23
• Full-year 2023 guidance adjusted: Net sales between CHF 380 million and CHF 400 million, EBITDA margin between 7.0% and 9.0%

Comet reported net sales of CHF 77.7 million in Q3/23, down 52.9% year-on-year (Q3/22: CHF 164.8 million). Net sales for the first nine months amounted to CHF 284.8 million compared to CHF 432.3 million in 9M/22 (–34.1%). The lower sales are due to the continued weak demand for semiconductor equipment. This primarily affects the Plasma Control Technologies (PCT) division, which is almost entirely focused on the semiconductor industry. The two X-ray divisions, X-Ray Systems (IXS) and X-Ray Modules (IXM), developed differently: while IXM still grew slightly year-on-year in Q3/23, sales in the IXS division fell significantly. Both divisions have felt the general decline in economic momentum over the past three months.

The stabilization in the chip industry which began towards the end of Q2/23 continued at a low level in Q3/23. However, sufficient inventories and production capacities are still available across the entire value chain to cover demand. This led to a further significant decline in net sales and a persistently low order intake at PCT. Order intake also remained below expectations in the IXS and IXM divisions. Overall, this resulted in a slightly better book-to-bill ratio for the Group of 0.86 at the end of Q3/23 (end of Q2/23: 0.82), which, however, does not indicate a marked upturn in business for Q4/23. Consequently, Comet has taken several measures in the first nine months to mitigate the impact of the correction in the semiconductor cycle. As a result, Comet expects a sequential increase in order intake, net sales, and EBITDA margin in Q4/23, although a noticeable market recovery will probably not start until 2024.

Outlook
The long-term growth prospects for Comet are intact. New applications for semiconductor devices, new technologies, and more complex chip architectures will continue to drive up demand for microchip production capacity. Comet will benefit from this with its technologically leading products in plasma control and semiconductor component X-ray inspection. Furthermore, new technologies in traditional markets such as automotive offer additional opportunities.

The previous assumption of a gradual recovery of the semiconductor business in the second half of 2023 has not yet materialized to the expected extent. However, Comet still expects a slight recovery in the fourth quarter followed by a stronger rebound of the business in the course of 2024. Despite economic headwinds, Comet expects the automotive, aerospace and security markets to remain largely stable throughout 2023. In this business environment, the company is consistently implementing its focus strategy.

Based on these assumptions, Comet adjusts its outlook for the financial year 2023. It is now targeting net sales between CHF 380 million and CHF 400 million and an EBITDA margin of 7.0% to 9.0%.

Comet Group
The Comet Group is a globally leading, innovative technology company based in Switzerland with a focus on plasma control and x-ray technology. With premium high-tech components and systems, we enable our customers to both enhance the quality of their products and make their manufacturing more efficient, and eco-friendly. Our innovative solutions are in demand in the semiconductor and electronics market, the aerospace and automobile industry and in security inspection. Headquartered in Flamatt, Switzerland, the Comet Group has a presence in all world markets. We employ more than 1,700 people worldwide, including about 600 in Switzerland. Besides production facilities in China, Denmark, Germany, Malaysia, Switzerland and the USA, we maintain various other subsidiaries in Canada, China, Japan, Korea, Taiwan and the USA. Comet (COTN) is listed on the SIX Swiss Exchange.