Does BE Semiconductor Industries (AMS:BESI) Have A Healthy Balance Sheet?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We can see that BE Semiconductor Industries N.V. (AMS:BESI) does use debt in its business. But is this debt a concern to shareholders?

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Why Does Debt Bring Risk?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.

What Is BE Semiconductor Industries's Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 BE Semiconductor Industries had €526.2m of debt, an increase on €182.8m, over one year. On the flip side, it has €490.2m in cash leading to net debt of about €36.0m.

How Strong Is BE Semiconductor Industries' Balance Sheet?

The latest balance sheet data shows that BE Semiconductor Industries had liabilities of €143.0m due within a year, and liabilities of €567.5m falling due after that. Offsetting these obligations, it had cash of €490.2m as well as receivables valued at €225.6m due within 12 months. So these liquid assets roughly match the total liabilities.

This state of affairs indicates that BE Semiconductor Industries' balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So it's very unlikely that the €8.59b company is short on cash, but still worth keeping an eye on the balance sheet. Carrying virtually no net debt, BE Semiconductor Industries has a very light debt load indeed.

See our latest analysis for BE Semiconductor Industries

In order to size up a company's debt relative to its earnings, we calculate its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and its earnings before interest and tax (EBIT) divided by its interest expense (its interest cover). The advantage of this approach is that we take into account both the absolute quantum of debt (with net debt to EBITDA) and the actual interest expenses associated with that debt (with its interest cover ratio).

BE Semiconductor Industries has a low net debt to EBITDA ratio of only 0.18. And its EBIT easily covers its interest expense, being 29.6 times the size. So we're pretty relaxed about its super-conservative use of debt. But the other side of the story is that BE Semiconductor Industries saw its EBIT decline by 5.2% over the last year. If earnings continue to decline at that rate the company may have increasing difficulty managing its debt load. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if BE Semiconductor Industries can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. So we always check how much of that EBIT is translated into free cash flow. During the last three years, BE Semiconductor Industries generated free cash flow amounting to a very robust 94% of its EBIT, more than we'd expect. That positions it well to pay down debt if desirable to do so.

Our View

Happily, BE Semiconductor Industries's impressive interest cover implies it has the upper hand on its debt. But truth be told we feel its EBIT growth rate does undermine this impression a bit. Looking at the bigger picture, we think BE Semiconductor Industries's use of debt seems quite reasonable and we're not concerned about it. While debt does bring risk, when used wisely it can also bring a higher return on equity. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. Be aware that BE Semiconductor Industries is showing 1 warning sign in our investment analysis , you should know about...

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.