Equities

ASML Beats Profit, Faces 22% Sales Drop Amid Market Hopes

ASML beats profit expectations with 1.22 billion euros but sales drop 22%, maintaining an optimistic full-year outlook.

By Mackenzie Crow

4/17, 01:32 EDT
ASML Holding N.V. - New York Registry Shares
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Key Takeaway

  • ASML reports a mixed Q1 with net sales of 5.29 billion euros missing estimates but net profit beating expectations at 1.22 billion euros.
  • Despite a year-on-year sales drop of 21.6% and net income decline of 37.4%, ASML remains optimistic about a stronger H2 2024.
  • Euro Stoxx 50 futures dip following ASML's report, yet upcoming UK CPI data could significantly sway European market sentiment.

ASML's Mixed Financial Performance

ASML, a leading player in the semiconductor industry, reported a mixed financial performance for the first quarter. The company's net sales amounted to 5.29 billion euros, falling short of the LSEG consensus estimates of 5.39 billion euros. However, ASML's net profit for the quarter stood at 1.22 billion euros, surpassing expectations of 1.07 billion euros. Despite the decline in net sales by 21.6% year-on-year and a drop in net income by 37.4%, ASML's CEO, Peter Wennink, maintained an optimistic outlook for the full year. Wennink stated, "Our outlook for the full year 2024 is unchanged, with the second half of the year expected to be stronger than the first half, in line with the industry’s continued recovery from the downturn." He further emphasized 2024 as a transition year, highlighting ongoing investments in capacity ramp and technology to prepare for the industry's upturn.

Market Reaction and Outlook

Following ASML's announcement, Euro Stoxx 50 futures experienced a downturn, reflecting investor concern over the company's first-quarter bookings falling below estimates. Despite this initial reaction, ASML's positive forecast for a stronger second half of the year offers a potential counterbalance to the negative sentiment. This outlook is significant as it suggests a recovery and growth trajectory in the near term. Moreover, the broader market sentiment, as indicated by the positive movement in US equity futures, suggests an overarching optimism that could influence European stocks as the market progresses through the day.

Influence of Upcoming Economic Data

The upcoming UK Consumer Price Index (CPI) data is poised to be a critical factor for European stocks, including the Euro Stoxx 50 futures. This economic indicator is anticipated to act as a swing factor, potentially influencing market direction based on its outcome. Positive CPI data could enhance investor confidence, possibly leading to a rebound in European stocks. Conversely, disappointing CPI data might amplify the negative sentiment triggered by ASML's booking shortfall. Investors are expected to closely monitor the CPI release, as it could offer further insights into the UK economy's health and its potential impact on European markets.

Management Quotes

  • Peter Wennink, CEO of ASML:

    "Our outlook for the full year 2024 is unchanged, with the second half of the year expected to be stronger than the first half, in line with the industry’s continued recovery from the downturn... We see 2024 as a transition year with continued investments in both capacity ramp and technology, to be ready for the turn in the cycle."