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ASML's second quarter profit margin tops estimates, retains annual outlook

ASML's second quarter profit margin tops estimates, retains annual outlook
FILE PHOTO: ASML Holding logo is seen at company's headquarters in Eindhoven, Netherlands, Januari 23, 2019. REUTERS/Eva Plevier   -   Copyright  EVA PLEVIER(Reuters)
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AMSTERDAM (Reuters) – Dutch semiconductor equipment maker ASML <ASML.AS> on Wednesday posted a better-than-expected profit margin for the second quarter and maintained its expectations of solid growth for the rest of the year.

ASML, whose machines are used by major chipmakers such as Samsung <005930.KS>, TSMC and Intel <INTC.O>, said its profit margin improved to 43%, from 41.6% in the first three months of the year, on sales of 2.57 billion euros (2.32 billion pounds).

In April, the Dutch company said it expected a gross margin between 41% and 42% in the second quarter, with sales of 2.5 billion euros to 2.6 billion euros.

ASML said sales would rise to 3 billion euros in the third quarter, with a gross margin between 43 and 44%, and held on to its prediction that 2019 would be “a growth year”.

The semiconductor industry has been grappling with slowing demand since the second half of 2018, as mobile phone markets in major economies are increasingly saturated, while sales have also been hurt by the U.S.-China trade standoff.

But new technologies such as the rollout of 5G telecom networks have kept up demand for ASML’s machines, CEO Peter Wennink said, leading to increasing orders for its newest and most expensive lithography systems, which are used to map out the circuitry of computer chips.

This means “that this year Logic sales will be significantly up”, Wennink said. He noted that while demand for memory chips was down as compared to last quarter, “all in all it compensates”.

(Reporting by Bart Meijer; Editing by Himani Sarkar)

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