Osram with strong start into fiscal 2016

2016/02/03

- Revenue up 6 percent; stable on a comparable basis
- Adjusted EBITA margin rises to almost 12 percent
- Osram confirms updated outlook for fiscal 2016

"We are very satisfied with the first quarter and optimistic about how the rest of the fiscal year will progress. The results affirm the path we have decided to take and which we will continue to pursue. The measures we started last year have set the course for our innovation and growth initiative. This initiative will make our three strategic pillars even more powerful and bring us a significant step forward on our way to becoming a high-tech company," said Olaf Berlien, Chief Executive Officer of OSRAM Licht AG.

Osram had a successful start into the current fiscal year that started in October 2015. Revenue in the first quarter rose six percent from a year earlier to almost €1.48 billion. On a comparable basis, i.e., adjusted for portfolio and currency effects, revenue remained stable. EBITA1 excluding special items rose 16 percent to €175 million, translating into a margin of 11.8 percent. These developments were supported by all businesses, in particular by the LED component business (Opto Semiconductors) and Specialty Lighting. Both reporting segments benefited from the overall healthy demand from the automotive industry, among other factors. The general lighting lamps business (Lamps) also recorded a pleasing revenue development, with good factory load having a positive impact on earnings. As announced, net income benefited from the book gain resulting from the sale of the shares in Foshan Electrical & Lighting Co., Ltd. (Felco) and reached €338 million in the first quarter. In the prior-year period, high transformation costs had led to a loss. Considering the development of the first three months, Osram confirms its updated outlook for fiscal 2016.

With the innovation and growth initiative, which was presented in November, Osram puts its focus on sustainable growth and wants to take even bigger advantage of the potential offered by semiconductor-based lighting technologies. Following the carve-out of the general lighting lamps business, the company will be based on three strategic pillars in the future: LED components (Opto Semiconductors, OS); Specialty Lighting (SP); luminaires, solutions and electronic components (Lighting Solutions & Systems, LSS).

Osram reporting segments in the first quarter

Opto Semiconductors recorded a year-on-year revenue increase of seven percent on a comparable basis in the first quarter, primarily driven by growth in the automotive and infrared businesses as well as high license income. At 22.3 percent, the EBITA margin was extraordinarily high, mainly because of the mentioned license income. Opto Semiconductors launched a number of new, innovative products in the past quarter, such as the LED component Soleriq L 38. The long and thin shape of this LED provides the basis for so-called LED filament lamps, which in terms of their look and beam angle characteristics are at least comparable to their incandescent predecessors. Taking into account the trend that mobile devices are becoming thinner and thinner, Opto Semiconductors has also launched an even thinner infrared diode for unlocking such devices by using iris scanning.

Specialty Lighting, with its Automotive Lighting and Professional Industrial Applications units, posted a revenue increase of ten percent on a comparable basis in the first quarter, among other things due to resuming growth of the automotive business in China and continued LED growth. At 14.4 percent, the EBITA margin, excluding special items, reached a good level, despite an increasing revenue share of LED-based products and higher expenses for research and development. With the new BMW 7 Series, another series-produced vehicle using Osram’s innovative laser lighting technology is now available. Osram is currently the only company in the world delivering laser modules for headlights ready for series production. They ensure glare-free high beam light with an extremely long range of up to 600 meters.

The Lighting Solutions & Systems reporting segment comprises the business with luminaires and systems. The segment’s comparable revenue increased one percent in the first quarter as a result of rising luminaires and solutions revenues in Europe as well as continued growth in the components business. The adjusted EBITA margin improved to minus 1.3 percent. The reporting segment completed a very special project in the first quarter: Light control from Osram turns the new Shanghai Tower – with over 600 meters the world’s second tallest building – into a landmark of the Chinese megacity that is visible form a large distance.

The Lamps reporting segment comprises the general lighting lamps business. In view of the continuing decline in demand for traditional lamps, the segment recorded a comparable revenue decrease of six percent in the first quarter. The decline was smaller than the company had originally anticipated. Thanks to good factory load, the adjusted EBITA margin reached 9.8 percent.

Outlook for fiscal 2016

Osram confirms the recently updated outlook. For fiscal 2016, the managing board expects revenue on a comparable basis to be slightly below the prior-year level. The EBITA margin, excluding special items, is anticipated to reach more than eight percent. In addition, the managing board expects net income and return on capital employed (ROCE) to rise sharply due to the book gain from the sale of the Felco shares. Due to a strong increase in capital expenditure as well as special items such as the intended special funding of pension plans, free cash flow is expected to amount to a low to medium negative triple-digit million-euro figure. The managing board is confident about Osram’s positive midterm prospects and therefore intends to keep the dividend at least stable with €0.90 per share for fiscal 2016.

The company will hold a conference call for analysts on the results for the first quarter with OSRAM Licht AG’s managing board on Wednesday from 2:00 p.m. CET. The conference call will be broadcast via the Internet at www.osram-group.com/investors.

Key financial data of OSRAM Licht Group in the first quarter

  1st quarter 2016 1st quarter 2015 Change nominal
Revenue 1,477 1,393 6.0%
EBITDA 211 16 >200%
EBITDA, adjusted 233 208 11.8%
EBITA 152 (41) n/a
...Margin 10.3% (3.0%) 1,330 bps
EBITA, adjusted 175 151 15.6%
…Margin 11.8% 10.8% 100 bps
Income before taxes 445 (56) n/a
Net income 338 (39) n/a
Free cash flow (37) 56 n/a
Employees ('000) 34.0 33.7 0.9%

(Unaudited figures. Figures in millions of euros, margins in percent, employees as of December 31. Negative values in brackets.)

Reporting segment performance in the first quarter2

  1st quarter 2016 1st quarter 2015 Change nominal
Opto Semiconductors      
…Total revenue 338 295 14.5%
…EBITA 75 49  
…EBITA, adjusted 75 49  
Specialty Lighting      
…Total revenue 508 435 16.8%
…EBITA 69 58  
…EBITA, adjusted 73 72  
Lighting Solutions & Systems      
…Total revenue 243 231 5.2%
…EBITA (4) (7)  
…EBITA, adjusted (3) (5)  
Lamps      
…Total revenue 537 545 (1.6%)
…EBITA 62 (60)  
…EBITA, adjusted 53 56  

(Unaudited figures in millions of euros. Negative values in brackets.)

1Earnings before interest, taxes, and amortization 

2Fiscal year 2015 figures are reconciled to reflect the new OSRAM cost allocation and segment structure.

ABOUT OSRAM

OSRAM, based in Munich, is a globally leading lighting manufacturer with a history dating back more than 100 years. The portfolio ranges from high-tech applications based on semiconductor technology, such as infrared or laser lighting, to smart and connected lighting solutions in buildings and cities. OSRAM had around 33,000 employees worldwide at the end of fiscal 2015 (September 30) and generated revenue of almost €5.6 billion in that fiscal year. The company is listed on the stock exchanges in Frankfurt and Munich (ISIN: DE000LED4000; WKN: LED 400; trading symbol: OSR). Additional information can be found at www.osram-group.com.

DISCLAIMER

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