Siltronic Shares Plummet on Dividend Cut, Delayed Mid-Term Guidance

Siltronic AG, a leading manufacturer of hyperpure semiconductor silicon wafers, has seen its shares hit eight-year lows following the announcement of a significant dividend cut and a delay in achieving mid-term guidance targets. The company's stock price has been on a downward spiral, dropping 2.8% to close at €43.08, dangerously approaching its 52-week low of €41.64. The dramatic reduction in the dividend payout, from €1.20 per share in 2023 to €0.20 per share in 2024, has sent shockwaves through the market, with analysts expecting a smaller reduction.



The company's preliminary 2024 sales of €1,413 million, about 7% below the previous year, and an EBITDA margin of 26%, at the upper end of the guided range of 24 to 26%, have not been enough to reassure investors. Siltronic's guidance for 2025 also paints a bleak picture, with sales expected to be in the region of the previous year, no increase expected year-over-year, and H1 2025 expected to be significantly below H2 2024. The company's mid-term ambition of 2028 is now expected to be realized after the year 2028 due to the delayed demand recovery.



Analysts maintain a positive long-term outlook for Siltronic, with an average price target of €79.60, suggesting potential upside of over 80% from current levels. However, recent quarterly performance shows some pressure, with earnings per share declining to €0.60 from €1.10 year-over-year, and the company managed to achieve a modest revenue increase of 2.35% to €357.30 million. Experts project earnings per share of €2.22 for the full year 2024.

Siltronic's Executive Board has proposed a dividend of €0.20 per share to the Annual General Meeting, a significant reduction from the previous year's €1.20 per share. This decision, aimed at supporting organic growth, has negatively impacted investor sentiment and contributed to the share price decline. The company's guidance for 2025 also reflects the ongoing challenges in the semiconductor industry, with demand recovery delayed due to continued high inventories at chip manufacturers and their customers.



In conclusion, Siltronic's shares have plummeted due to the dividend cut and delayed mid-term guidance, with the stock price dangerously approaching its 52-week low. Despite a positive long-term outlook, recent performance and guidance have raised concerns among investors. The company's focus on organic growth and cost reduction, as well as its investments in new production capacities, will be crucial in addressing the ongoing demand weakness and high inventory levels. As the semiconductor industry continues to evolve, Siltronic must adapt and innovate to capitalize on growth opportunities and regain investor confidence.