Osram records good start into fiscal 2015

2015/02/04

First-quarter revenue rises 5 percent on nominal basis; slight comparable increase
Adjusted EBITA margin at 10.8 percent
Transformation of company progressing well
Lighting company confirms outlook for fiscal 2015

Osram recorded a strong operating performance in the first quarter of the current fiscal year that started in October 2014. With growth of 0.5 percent, revenue was slightly above the year-earlier period on a comparable basis, i.e. excluding portfolio and currency effects. In nominal terms, the company even recorded a revenue increase of five percent to almost €1.4 billion, resulting from the weakness of the euro against key currencies and the acquisition of Clay Paky. EBITA1 excluding special items rose 23 percent to €151 million in the first quarter, translating into a margin of 10.8 percent. This development was once again supported by positive effects from the transformation program, productivity improvements as well as the ongoing good performance of the Opto Semiconductors and Specialty Lighting segments. On reported basis, Osram in contrast recorded an EBITA loss of €41 million. The figure includes transformation costs of €184 million, which are in particular related to the already communicated headcount adjustments in Germany. The quarterly loss after tax was €39 million. In view of the development in the first quarter, Osram confirms the outlook for fiscal 2015.

“The first quarter marks a successful start into the new fiscal year. But we cannot rest on the already achieved. We will continue with our transformation and will announce in spring what that means in strategic terms,” said Olaf Berlien, Chief Executive Officer of OSRAM Licht AG.

“The quarter was also strong due to seasonal effects and was characterized by an exceptionally good operating result. At the same time, our LED-based business showed substantial growth again and reached 39 percent of total revenue. The traditional business performed well despite a still very challenging environment. We also made a major step forward regarding our transformation program,” added Chief Financial Officer Klaus Patzak.

Osram reporting segments and regional developments in the first quarter

In the first quarter, Osram’s opto-semiconductor components reporting segment (Opto Semiconductors, or OS) posted a comparable revenue increase of four percent from an exceptionally strong year-earlier period. The development was in particular supported by the industry business. Overall, all reporting regions contributed to the segment’s growth in the quarter. At 16.2 percent, the EBITA margin again reached a very good level and benefited from a favorable product mix, among other things.

Specialty Lighting (SP), with its Automotive Lighting and Display/Optics units, continued to benefit from robust demand and recorded revenue growth of six percent on a comparable basis in the quarter. Nominal growth was higher, at 15 percent, due to the weaker euro and the first-time consolidation of Italian entertainment lighting company Clay Paky. Excluding special items, the adjusted EBITA margin reached 16.0 percent.

The reporting segment LED Lamps & Systems (LLS) covers Osram’s business with LED lamps, light engines as well as LED drivers. In light of the continuously growing market acceptance of LED-based products, the segment’s revenue rose 65 percent on a comparable basis in the first quarter. The adjusted EBITA margin improved by more than 20 percentage points year on year to minus 4.4 percent due to economies of scale, among other things.

The market trend toward LEDs continued to have a negative impact on the Classic Lamps & Ballasts (CLB) reporting segment in the first quarter. Still, the comparable revenue decrease of ten percent was not as strong as in the previous quarters. The adjusted EBITA margin was 11.4 percent and benefited from cost savings.

The Luminaires & Solutions (LS) reporting segment comprises luminaires for professional customers, products for consumers as well as service and solutions business. The segment’s revenue fell 19 percent in the first quarter on a comparable basis, mainly as a result of the reorganization of the service business in North America and the regional focus strategy of the luminaire business. The segment’s adjusted EBITA margin was minus 7.0 percent.

From a regional perspective2,Osram’s EMEA reporting region recorded a year-over-year comparable increase in first-quarter revenue of one percent. Revenue in the Americas region also rose one percent on that basis, while revenue in the APAC region declined two percent on a comparable basis.

Outlook for fiscal 2015

Osram confirms the outlook given at the beginning of fiscal 2015. For fiscal 2015, the Managing Board thus expects revenues to be on the level of fiscal 2014 on a comparable basis. The adjusted EBITA margin is also expected to be at the prior-year level. In addition, the Managing Board expects both net income and return on capital employed (ROCE) to decrease sharply in the current fiscal year due to a sharp increase in transformation costs. Free cash flow is expected to come in with a positive triple-digit million euro amount in fiscal 2015 but to stay below the prior-year level. Based on the outlook for fiscal 2015 and Osram’s midterm prospects, the Managing Board intends dividend continuity with €0.90 per share also for fiscal 2015.

Highlights in the first quarter

Osram has made further important achievements in the first quarter of fiscal 2015. The acquisition of Clay Paky was completed in October. Clay Paky is a leading provider of entertainment lighting for shows and events whose products were for example most recently used to illuminate the traditional Nobel Prize Banquet in Stockholm. Osram also set the stage for state-of-the art lighting at the end of October, when the new lighting solution in the Sistine Chapel officially went into operation. Osram was in charge of realizing this project, which was financially supported by the European Union. The new installation consists of 7,000 LEDs and sets new standards in terms of quality of light and energy efficiency. But Osram is also leading the way regarding non-visible lighting. A few weeks before the International Consumer Electronics Show (CES) in Las Vegas, the company presented its first integrated optical sensor for automatic fitness monitoring, which is used in mobile devices such as smartwatches or fitness bracelets. The sensor measures the wearer’s blood oxygen level and pulse without the inconvenience of a chest band. In December, Osram also presented an infrared emitter for unlocking electronic devices “with a single glance”. Biometric identification methods for cell phones and tablets are a big trend because such devices are increasingly being used for sensitive applications such as online banking and shopping. In addition to fingerprint scanning, many manufacturers are currently considering the potential of iris scanning as a new biometric method for unlocking electronic devices. With this technology, an infrared light illuminates the user’s eye so that a camera can take a picture of the iris and identify characteristic features.

The company will hold a conference call for journalists on the preliminary results for the first quarter with the Managing Board of OSRAM Licht AG today at 9:00 a.m. CET. The conference will also be broadcast via the Internet at www.osram.com/media/news/press-releases. After the event, a recording of the conference will be provided at the same link.

Starting at 2:00 p.m. CET, you can follow the conference call for analysts with the Managing Board at www.osram.com/investors.

The full report of OSRAM Licht AG’s first quarter will be posted on the company’s Investor Relations homepage at www.osram.com/investors on February 16.

Key financial data of OSRAM Licht Group in the first quarter

1st quarter 2015 1st quarter 2014 Change
Nominal
Revenue 1,393 1,326 5%
EBITA (41) 112 --
...Margin (3.0%) 8.5% (1,150 bps)
EBITA, adjusted 151 123 23%
...Margin 10.8% 9.3% 150 bps
Income before taxes (56) 97 --
Net income (39) 68 --
Free cash flow 56 72 (22%)
Employees ('000) 33.7 34.1 (1%)

(Preliminary, not yet with review opinion, figures in millions of euros, margins in percent, employees as of December 31. Negative values in brackets.)

Reporting segment performance in the first quarter

1st quarter 2015 1st quarter 2014 Change
nominal
Opto Semiconductors
...Total revenue 295 270 9%
...EBITA 48 36
...EBITA, adjusted 48 36
Specialty Lighting
...Total revenue 433 376 15%
...EBITA 64 58
...EBITA, adjusted 69 59
LED Lamps & Systems
...Total revenue 162 95 70%
...EBITA (7) (25)
...EBITA, adjusted (7) (25)
Classic Lamps & Ballasts
...Total revenue 505 551 (8%)
...EBITA (68) 65
...EBITA, adjusted 58 68
Luminaires & Solutions
...Total revenue 111 135 (17%)
...EBITA (10) (15)
...EBITA, adjusted (8) (11)

(Preliminary, not yet with review opinion, figures in millions of euros. Negative values in brackets.)

1Earnings before interest, taxes and amortization

2Osram divides its business into the three regions APAC (Asia Pacific), EMEA (Europe, Middle East and Africa) and the Americas (North and South America).

ABOUT OSRAM

OSRAM of Munich, Germany is one of the two leading light manufacturers in the world. The company's portfolio covers the entire value chain from components – including lamps, electronic control gear and opto semiconductors such as light-emitting diodes (LED) – as well as luminaires, light management systems and lighting solutions. OSRAM has around 34,000 employees worldwide and generated revenue of more than €5.1 billion in fiscal 2014 (ended September 30). The company's business activities have been focusing on light – and hence on quality of life – for over 100 years. The company was listed on the stock exchanges in Frankfurt and Munich on July 8, 2013 (ISIN: DE000LED4000; WKN: LED 400; Trading symbol: OSR).
Additional information can be found at www.osram-group.com

DISCLAIMER

This document contains statements and information pertaining to our future business and financial performance and future developments that may constitute forward-looking statements – i.e. statements about processes that take place in the future, not in the past. These statements pertaining to the future can be identified by expressions such as "anticipate", "expect", "want", "intend", "plan", "believe", "aspire", "estimate", "will”, "predict" or words of similar meaning. Such statements are based on current expectations and certain assumptions of OSRAM‟s management. They are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond OSRAM‟s control, affect OSRAM‟s operations, performance, business strategy and results and could cause the actual results, performance or achievements of OSRAM to be material different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements or anticipated on the basis of historic trends. These factors include in particular, but are not limited to, the matters described in the chapter “Report on Opportunities and Risks” in the Annual Report of OSRAM Licht Group for fiscal 2013. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results, performance or achievements of OSRAM may vary materially from those described in the relevant forward-looking statement as being expected, anticipated, intended, planned, believed, sought, estimated or projected. OSRAM neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated. Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures they reference.