Release Date: February 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Melexis NV (XBRU:MELE, Financial) achieved a record number of product launches in 2024, setting a strong foundation for future sales growth.
- The company continues to capture a strong level of design wins in both automotive and non-automotive applications, indicating robust innovation and market penetration.
- Geographically, Melexis NV has shown strong design win performance in China, confirming strategic positioning in this key market.
- Despite not meeting the original sales target, Melexis NV's 2024 sales were broadly stable and outperformed many peers.
- The company is cautiously optimistic about improving customer demand around summer 2025, based on inventory corrections and market forecasts.
Negative Points
- Melexis NV did not achieve its original sales target of EUR1 billion for 2024, which was a disappointment.
- Sales for the full year 2024 decreased by 3% compared to the previous year, with a notable 21% decrease in Q4 sales year-over-year.
- The operating result for 2024 decreased by 16% compared to 2023, reflecting challenges in maintaining profitability.
- The net result for 2024 saw an 18% decrease compared to the previous year, impacting earnings per share.
- The company is experiencing ongoing customer inventory corrections, which are expected to continue into the first half of 2025, affecting short-term sales outlook.
Q & A Highlights
Q: How has the inventory correction evolved since October, and what are your expectations moving forward?
A: Marc Biron, CEO, explained that while there were significant pushout requests in Q4, the order book is now stable and healthy. They anticipate customer inventory levels to deplete around summer, based on reports and customer interviews, leading to improved demand.
Q: What impact do you expect from the transition back to standard agreements on pricing and volume?
A: Marc Biron noted that pricing negotiations in 2024 were somewhat independent of long-term agreements (LTAs). They expect low single-digit price adjustments, similar to the 2-3% seen in 2024, to continue.
Q: Can you explain the sharp fall in gross margin and its causes?
A: Karen van Griensven, CFO, attributed the decline to temporary effects such as underutilization of testing capacity and higher yield loss, not due to price erosion or product mix. They expect these issues to be non-structural.
Q: How do you see the inventory correction timeline affecting the second half of the year?
A: Marc Biron indicated that while the exact timing is uncertain, they expect inventory correction to conclude around mid-year. The book-to-bill ratio is increasing, suggesting improvement in the second half.
Q: What are the prospects for Melexis in the robotics sector and other non-automotive markets?
A: Marc Biron highlighted robotics as a strategic focus, with several product launches planned. While digital health remains strong, robotics is showing significant growth potential in their opportunity pipeline.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
