At its annual general meeting (AGM), Martin Goetzeler, CEO of deposition equipment maker Aixtron SE of Aachen, Germany since March, set out measures that the firm's executive board intends to implement together with Aixtron's team to return it to sustainable profitability.
"We have to focus more closely than ever on our core competence – optimally supporting our customers to reach their targets by offering efficient high-tech equipment for use in complex material deposition," Goetzeler. "We aim to regain our position of leadership, and on a sustainably profitable basis," he adds, as he sets out a clear direction for the company in the 5-Point Program. "The challenges currently faced by Aixtron resulted from both internal and external factors. "Processes and responsibilities are two particular areas where we have to do our homework."
The first measures have already been initiated in recent weeks. These include a project to enhance efficiency in product development. Secondly, the executive board has decided to cut more than 20% of jobs in Germany. Further measures aim to contribute towards sustainable profitability.
Although weakness is still apparent on the demand side, the executive board stresses that the positive medium- and long-term outlook is still intact for the metal-organic chemical vapor deposition (MOCVD), silicon and organic deposition technologies provided by Aixtron.
Key aspects of the 5-Point Aixtron Program inclide the following:?
1. Customer – focusing on customer benefit. To optimally address customer needs, such as product quality and productivity, Aixtron compiles roadmaps together with its customers that are then factored into the relevant development programs. The business model is being reviewed to boost the service business.
2. Technology and products – putting a unique product portfolio to more effective use, strengthening future products.? To be sustainably profitable, Aixtron is building on technological leadership in complex material deposition and aims to regain market leadership in MOCVD technology for LED production.
3. Efficiency – systematically optimizing process and project structures. A cross-functional project aims to optimize the timing and use of resources in product development and thus make it possible to achieve development results at lower expense. The firm will also step up its partnership-based cooperation with suppliers.
4. Finance – value-oriented financial targets. Aixtron's executive board sees management by clear financial targets as the basis for achieving sustainable profitability. It will focus on four key financial figures: revenue, EBIT (earnings before interest and taxes), free cash flow, and return on capital employed exceeding the cost of capital over a business cycle (ROCE > WACC). The current priority has been to rapidly adjust costs to present circumstances. For this year, the executive board has already decided in March to cut operating expenses – excluding restructuring and transformation expenses – by 20% compared with last year, and thus to reduce the breakeven point.
5. Employees – strengthening Aixtron culture, taking individual responsibility, fortifying communication. Following some tough quarters, Aixtron aims to reinforce its employees' sense of identification with the company. Moreover, the executive board wants to further develop its management culture and to adapt it to new challenges. To accomplish this, the firm is agreeing clear goals and closely monitoring their achievement.
Aixtron adds that, in its future financial reporting, the executive board will regularly report both internally and externally on the status of this company program.
