Outstanding quarter makes Osram confident about the future

2016/04/27

  • Comparable revenue rises 3 percent in second quarter
  • Adjusted EBITA margin reaches more than 12 percent
  • Osram confirms raised outlook for fiscal 2016

“The second quarter was outstanding. We have achieved the best result in more than twenty quarters. And for the first time in ten quarters, revenue showed a noticeable increase nominally as well as on a comparable basis. This shows that our innovation and growth strategy is taking us in the right direction. Osram will successfully continue along this path. The foundation couldn’t be stronger,” said Olaf Berlien, Chief Executive Officer of OSRAM Licht AG.

Osram continued its very good performance in the second quarter of fiscal 2016. On a comparable basis, i.e. adjusted for portfolio and currency effects, revenue in the three months ending March 31 rose three percent compared with the prior-year period and reached almost €1.43 billion. EBITA1 excluding special items increased 15 percent to €174 million, translating into a margin of 12.2 percent. The earnings development was, among other things, supported by a favorable product mix in the LED components business (Opto Semiconductors) and the Specialty Lighting segment. The reason for this was in particular a sound automotive business. The improved revenue trend can especially be attributed to the general lighting lamps business (Lamps) and the Lighting Solutions & Systems business. Net income was affected by extraordinary expenses related to the carve-out of the lamps business and rose moderately to €80 million. Osram confirms its recently updated outlook for fiscal 2016.

Osram reporting segments in the second quarter

In the second quarter, Specialty Lighting (SP), with its Automotive Lighting and Professional Industrial Applications units, posted a comparable revenue increase of seven percent from the year-earlier period. At 14.2 percent, the EBITA margin excluding special items reached a good level despite an increasing revenue share of LED-based products and higher research expenses for innovative products. The reporting segment benefited from a strong automotive aftermaket business in the U.S. as well as government incentives for vehicle purchases in China. Osram will give an impressive demonstration of its entertainment lighting expertise in May at the Eurovision Song Contest in Stockholm.

The Lighting Solutions & Systems (LSS) reporting segment comprises the business with luminaires and systems and recorded a revenue increase of ten percent on a comparable basis in the second quarter, driven by demand for LED-based products. The adjusted EBITA margin improved by two percentage points to minus 1.9 percent. The second quarter saw the ground-breaking of new electronic components production facilities in Plovdiv, Bulgaria, and Monterrey, Mexico, which are being established in response to rising demand for intelligent lighting controls for the respective local markets, among other things.

Opto Semiconductors (OS) increased its second-quarter revenue on a comparable basis by five percent, especially due to continuing high growth in the automotive business. At 24.5 percent, OS recorded an outstanding EBITA margin, benefiting in particular from strong demand for high-margin products for special applications as well as currency effects. In the past quarter, the reporting segment again generated income from patent licensing, albeit to a much lesser extent than in the first quarter. This underlines the company’s sound global patent position, which provides customers who integrate LED components into their products with a high level of security. In March, the ground-breaking for the new LED chip factory in Kulim took place.

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 two percent. This decline was clearly lower than the company had originally expected, among other things due to a substantial rise in revenue in the LED lamp business and a still good demand for halogen lamps. The adjusted EBITA margin amounted to 7.5 percent. At the Light + Building trade show in Frankfurt in March, the segment presented itself for the first time under its new name Ledvance.

Outlook for fiscal 2016

For fiscal 2016, the managing board expects revenue on a comparable basis to be above the prior-year level. The EBITA margin, excluding special items, is anticipated to reach more than 10 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 journalists with Chief Executive Officer Olaf Berlien today at 9:00 a.m. CEST. The conference will be broadcast via the Internet at www.osram.com/press. Subsequently, a recording will be available on the website.

Starting at 1:00 p.m. CEST, you can follow the conference call for analysts at www.osram.com/ir.

Key financial data of OSRAM Licht Group in the second quarter

  2nd quarter 2016 2nd quarter 2015 Change nominal
Revenue 1,426 1,399 1.9%
EBITDA 174 187 (6.5%)
EBITDA, adjusted 229 211 8.9%
EBITA 119 125 (4.7%)
…Margin 8.3% 8.9% (60 bps)
EBITA, adjusted 174 151 14.9%
…Margin 12.2% 10.8% 140 bps
Income before taxes 104 110 (5.7%)
Net income 80 78 2.9%
Free cash flow (28) 27 n/a
Employees (‘000) 33.9 32.6 4.2%

(Preliminary, unaudited figures. Figures in millions of euros, margins in percent, employees as of March 31. Negative values in brackets.)

Reporting segment performance in the second quarter2

  2nd quarter 2016 2nd quarter 2015 Change nominal
Specialty Lighting      
…Total revenue 509 479 6.3%
…EBITA 70 73  
…EBITA, adjusted 72 77  
Lighting Solutions & Systems      
…Total revenue 243 223 9.0%
…EBITA (7) (11)  
…EBITA, adjusted (5) (9)  
Opto Semiconductors      
…Total revenue 342 321 6.4%
…EBITA 84 56  
…EBITA, adjusted 84 56  
Lamps      
…Total revenue 485 508 (4.6%)
…EBITA 23 36  
…EBITA, adjusted 37 43  

(Preliminary, unaudited figures in millions of euros. Negative values in brackets.)

1 Earnings before interest, taxes, and amortization
2 Fiscal 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.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.