Ad hoc: Osram starts new fiscal year with accelerated growth

2017/02/08

- First-quarter revenue1 rises almost 8 percent on a comparable basis
- Adjusted EBITDA margin at 18.0 percent
- Osram confirms outlook for fiscal 2017

1 Unless indicated otherwise, all figures relate to continuing operations (i.e. excluding the general lighting lamps business).

"In the first quarter, we continued last year's positive trend and laid a solid foundation for the remainder of the fiscal year. Compared with the prior year, we accelerated our growth even further. Demand for our products remains strong, which shows that our strategy is working. We are on the right track," said Olaf Berlien, Chief Executive Officer of OSRAM Licht AG.

Osram had a good start into fiscal 2017 as expected and accelerated growth in the first quarter. On a comparable basis, i.e. adjusted for portfolio and currency effects, revenue in the three months ending Dec. 31 rose almost eight percent year on year and reached €991 million. In the year-earlier period, comparable growth was around four percent. This trend was driven by an ongoing healthy opto semiconductor business and continued robust demand from the automotive industry. On a nominal basis, revenue increased around five percent. Adjusted for special items, EBITDA2 rose about five percent from a year earlier to €179 million, translating into a margin of 18.0 percent. Net income from continuing operations was €92 million in the first quarter. It included a one-time gain from a real estate sale in Korea that resulted in a low double-digit million-euro contribution. In the year-earlier period, Osram had recorded a book gain of around €270 million from the sale of its Felco shares. Adjusted for these two one-time items, net income increased in the first quarter of fiscal 2017. Based on the performance in the first three months and the current market development, Osram confirms its outlook for fiscal 2017.

2 Earnings before interest, taxes, depreciation and amortization.

Osram reporting segments in the first quarter

The LED components business (Opto Semiconductors, or OS) reported growth in all segments in the first quarter and posted a year-on-year revenue increase of 15 percent on a comparable basis. Growth was especially strong in automotive and the infrared business in general. With 26.2 percent, the EBITDA margin was again on a good level. Construction of the new LED chip factory in Kulim, Malaysia, continues to progress according to plan.

The Specialty Lighting (SP) reporting segment, which includes the Automotive Lighting and Professional & Industrial Applications units, benefited from continued robust demand from the automotive industry and recorded revenue growth of more than eight percent on a comparable basis in the first quarter. The adjusted EBITDA margin showed a slight year-on-year increase and reached 16.3 percent. Osram was recently awarded as 'Automotive Lighting Brand of 2016’ in China.

In the Lighting Solutions & Systems (LSS) reporting segment, which comprises the luminaires and systems business, revenue rose around two percent on a comparable basis, supported among other things by a strong digital components business. The adjusted EBITDA margin of 0.5 percent was slightly above break-even. In the first quarter, Osram agreed to buy a stake of 47.5 percent in Tvilight, a Dutch company offering sensor technology and smart light management software for smart city solutions, among other things.

Discontinued operations in the first quarter

In view of the agreed sale, the general lighting lamps business (Ledvance) is now reported under discontinued operations. Due to a seasonally strong business at Ledvance, net income from discontinued operations was €6 million in the first quarter. Osram continues to believe that the sale of Ledvance will be completed during the course of fiscal 2017.

Outlook for fiscal 2017

Osram confirms its outlook for fiscal 2017 given in November. The following statements relate to continuing operations and therefore do not include the general lighting lamps business, which in July 2016 Osram agreed to sell. For fiscal 2017, the managing board expects revenue growth on a comparable basis of five to seven percent. The adjusted EBITDA margin is anticipated to be at least 16 percent. Diluted earnings per share are expected to be in the range of €2.35 to €2.65, provided the share buyback program that started in 2016 continues as planned. Free cash flow is targeted to be around zero. The managing board is confident about Osram's positive medium-term prospects and is therefore aiming for a dividend of at least €1.00 per share also for fiscal 2017.

Starting at 9.00 a.m. CET today, the company will hold a conference call for journalists with the managing board of OSRAM Licht AG. The conference will be broadcast via the internet at www.osram-group.de/en/media/media-calendar. A recording will be made available there afterwards.

Starting at 1.00 p.m. CET, you can follow the conference call for analysts at www.osram-group.de/en/investors/publications/2017.

Key financial data of OSRAM Licht Group (cont. operations) in the first quarter

  1st quarter 2017 1st quarter 2016 Change nominal
Revenue 991 940 5.4%
EBITDA 188 165 13.8%
…Margin 18.9% 17.6% 140 bps
EBITDA, adjusted 179 171 4.7%
…Margin 18.0% 18.2% (10 bps)
EBITA 141 122 16.1%
…Margin 14.3% 12.9% 130 bps
EBITA, adjusted 132 127 4.0%
…Margin 13.4% 13.6% (20 bps)
Net income 92 316 (70.7%)
Free cash flow 83 9 >200%
Employees ('000) 25.7 24.6 4.5%

(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 quarter3

  1st quarter 2017 1st quarter 2016 Change nominal
Opto Semiconductors      
…Total revenue 387 336 15.2%
…EBITDA 101 100  
…EBITDA, adjusted 101 100  
Specialty Lighting      
…Total revenue 588 536 9.7%
…EBITDA 93 82  
…EBITDA, adjusted 96 86  
Lighting Solutions & Systems      
…Total revenue 251 243 3.3%
…EBITDA (1) 1  
…EBITDA, adjusted 1 3  

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

3Fiscal year 2016 figures are reconciled to reflect that beginning with fiscal 2017, further revenue generated with LED components for automotive customers is shown within the Specialty Lighting reporting segment.

ABOUT OSRAM

OSRAM, based in Munich, is a globally leading lighting manufacturer with a history dating back about 100 years. The product portfolio includes high-tech applications based on semiconductor technology such as infrared or laser lighting. The products are used in highly diverse applications ranging from virtual reality, autonomous driving or mobile phones to smart and connected lighting solutions in buildings and cities. In automotive lighting, the company is the global market and technology leader. Based on continuing operations (excluding Ledvance), OSRAM had around 24,600 employees worldwide at the end of fiscal 2016 (September 30) and generated revenue of almost €3.8 billion in that fiscal year. The company is listed on the stock exchanges in Frankfurt and Munich (ISIN: DE000LED4000; WKN: LED400; trading symbol: OSR). Additional information can be found at www.osram.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 materially 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 Risks and Opportunities” in the Annual Report of OSRAM Licht Group. 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.