Shares of VAT Group AG fell 5.7% to CHF660.80 on Tuesday, sharply underperforming the broader SMI index, which rose 0.3%. The decline occurred after the Swiss semiconductor equipment supplier reported a drop in first-half profit, as rising expansion costs weighed on margins despite a record Q2 order intake of CHF 500 million.
Record Demand vs. Profitability Pressures
VAT Group reported that second-quarter orders jumped 40% sequentially and approximately 102% year-on-year. This surge lifted the order backlog by 121% to CHF648 million. For the first half of the year, orders rose 75% year-on-year, which the company attributed to a sustained upturn in the semiconductor cycle. Specifically, new valve sales for semiconductors surged 134% year-on-year, while orders in Advanced Industrials grew 36%.
Despite the record bookings, the company’s first-half financial results showed a decline in profitability. First-half net profit fell 6.4% to CHF98.8 million, and sales declined 8.3% to CHF511.9 million. The EBITDA margin narrowed to 29.0% from 29.6% a year earlier. According to the company, this compression was primarily due to front-loaded ramp costs, lower cost absorption during early expansion phases, and supply-chain frictions and FX headwinds.
Aggressive Capacity and Workforce Expansion
To support the surging demand, VAT aggressively expanded its operational footprint. In the first half, the company added more than 700 employees across Romania, Switzerland, and Malaysia, representing roughly 22% growth in its workforce. Approximately 85% of these new hires were in manufacturing roles.
This expansion is focused heavily on Malaysia, where factory utilization currently stands between 80% and 85%, compared to about 70% in Switzerland. Management stated that these investments are expected to generate stronger operating leverage in the second half of the year as higher volumes flow through the expanded footprint.
Analyst Outlook and Future Guidance
The company reaffirmed its 2026 guidance for net income, free cash flow, EBITDA, EBITDA margin, sales, and orders. VAT also forecasted third-quarter sales between CHF355 million and CHF385 million and expressed confidence in reaching a quarterly run rate above CHF 450 million by year-end. Additionally, stronger industry forecasts for wafer fabrication equipment spending have led VAT to review its 2027 sales guidance.
Market analysts expressed mixed reactions to the results:
- Jefferies, which maintains an “underperform” rating, warned that the sharp increase in bookings could lead to investor concerns regarding inventory build, potentially impacting the stock’s valuation.
- Morgan Stanley, holding an “equal-weight” rating, noted that focus has shifted to execution after hiring and ramp-up costs hit first-half profitability. The firm also observed that third-quarter sales guidance was slightly below its own midpoint forecast.
Innovation and Strategic Growth
VAT continues to invest in its technology roadmap, spending about 7% of sales on R&D during the first half. The company secured 60 new specification wins in the first six months and is currently managing more than 130 development projects. Furthermore, CEO Urs Gantner announced the planned acquisition of Atonarp as part of the company’s long-term growth strategy.
From a valuation standpoint, some data indicates the stock trades at a premium. As of July 2026, VAT Group’s trailing P/E ratio was 92.9x, significantly higher than the peer average of 24.5% and the European machinery industry average of 21.4%.
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