Winbond Electronics (2344) H1 2024 earnings summary

Executive summary

• Net sales in Q2 2024 reached NT$21.48 billion, up 14.2% year-over-year, with net income rebounding to NT$1.71 billion from a loss in Q1 2024 and a significant increase from NT$569.7 million in Q2 2023.

• Gross margin improved to 33.1% in Q2 2024 from 27.6% in Q1 2024 and 31% in Q2 2023, with operating profit at NT$1.16 billion.

• Memory business, especially CMS, drove growth, with CMS revenue up 14.8% QoQ and 36.9% YoY, and gross margin expanding to 30.3%.

• Logic business (Nuvoton) saw a 2.8% QoQ and 8.1% YoY sales decline, posting a net loss for the quarter.

• For H1 2024, revenue was NT$41.61 billion, up 15% YoY, and net income attributable to parent was NT$1.26 billion, compared to a net loss of NT$657.5 million in H1 2023.

Financial highlights

• Q2 2024 EPS was NT$0.41, up from NT$0.09 in Q2 2023; H1 2024 EPS was NT$0.30, compared to a loss of NT$0.16 in H1 2023.

• EBITDA for Q2 2024 was NT$4.36 billion, up from NT$2.87 billion in Q1 2024.

• Free cash flow turned positive at NT$2.41 billion in Q2 2024, compared to negative NT$6.86 billion in Q1 2024.

• Operating cash flow for H1 2024 was NT$6.48 billion, up from NT$1.58 billion in H1 2023.

• Cash and equivalents at June 30, 2024, were NT$13.41 billion.

Outlook and guidance

• NOR Flash supply-demand expected to remain balanced in 2024, with tightening in 2025.

• DDR4/LPDDR4 supply capacity projected to decrease by over 30% YoY in 2025.

• Focus for 2H24 on ramping 4G DDR4 and LPDDR4, and expanding CMS for Edge AI applications.

• Management expects to meet capital and operational needs for the next 12 months, with sufficient liquidity and no major liquidity risks identified.

• The company is monitoring the impact of new carbon fee regulations, which are expected to apply from 2024, but the financial impact is not yet estimable.