Osram with continued growth in the third quarter

2016/07/27

  • Comparable revenue rises 11 percent; adjusted EBITA margin of 10.1 percent
  • Revenue boosted by pull-forward effects related to the lamps carve-out
  • Osram confirms its outlook for fiscal 2016

"The momentum of the excellent first half of the year also continued in the third quarter. Despite an expected weaker fourth quarter, we are approaching another record year with full steam. Our strategy is paying off: Osram is now a real success story. And following the agreed sale of the lamps business, we are accelerating our alignment as a high-tech company," said Olaf Berlien, Chief Executive Officer of OSRAM Licht AG.

In the third quarter of fiscal 2016, Osram continued to see healthy demand in its three strategic core businesses and additionally benefited from pull-forward effects related to the carve-out of the lamps business. On a comparable basis, i.e. adjusted for portfolio and currency effects, revenue in the three months ending June 30 rose eleven percent from a year earlier and reached €1.44 billion. About half of this growth was attributable to brought-forward deliveries that were carried out in the third quarter in view of the separation of the IT systems of Osram and the lamps business. On a nominal basis, Osram generated revenue growth of almost seven percent. EBITA1 excluding special items increased 13 percent to €145 million, translating into a margin of 10.1 percent. Especially the LED components business (Opto Semiconductors) continued to show a pleasant earnings development. Net income came to €28 million and was influenced by extraordinary expenses relating to the carve-out of the lamps business, among other things. Osram confirms its outlook for fiscal 2016.

Osram reporting segments in the third quarter

Specialty Lighting (SP), which includes the Automotive Lighting and Professional Industrial Applications units, not only benefited from the above-mentioned pull-forward effects but also from continuing growth of the automotive business in the third quarter, and recorded comparable revenue growth of 16 percent from the year-earlier period. The EBITA margin excluding special items reached 11.6 percent and was influenced by an increasing revenue share of LED-based products and higher expenses for innovative products, among other things. The recently agreed acquisition of U.S.-based Novità Technologies strengthens Osram's market position regarding automotive LED modules.

The Lighting Solutions & Systems (LSS) reporting segment, which comprises the luminaires and systems business, benefited from favorable demand for indoor luminaires, LED drivers and other products as well as pull-forward effects in the third quarter. As a result, comparable revenue rose 17 percent in total, and the adjusted EBITA margin came in at 0.2 percent, just above break-even. LSS products were recently in the spotlight on occasions such as the European soccer championship, where Osram equipped three stadiums with modern lighting technology, including the national stadium near Paris.

Opto Semiconductors’ (OS) revenue increased 13 percent on a comparable basis in the third quarter and reached a new record level of €371 million, driven by the automotive and industrial businesses as well as the infrared business. At 22.2 percent, the EBITA margin again reached a very good level, among other things due to the continued strength of the premium products business. Construction of the new LED chip factory in Kulim, Malaysia, is progressing according to plan.

The Lamps reporting segment, which comprises the general lighting lamps business, also benefited from the pull-forward effects related to the IT separation. Comparable revenue rose three percent in the third quarter. Excluding this effect, comparable revenue would have declined slightly. The adjusted EBITA margin was 5.5 percent.

Outlook for fiscal 2016

The outlook for fiscal 2016 including Lamps is confirmed. For fiscal 2016, the managing board expects revenue on a comparable basis to be above the prior-year level. The EBITA margin, adjusted for 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 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 medium-term prospects and therefore intends to keep the dividend at least stable with €0.90 per share for fiscal 2016.

Starting at 9.00 a.m. CEST today, the company will hold a press conference at its headquarters in Munich. The conference will be broadcast via the internet at www.osram-group.de/en/media/media-calendar.

Starting at 2.00 p.m. CEST, you can follow the conference call for analysts at www.osram-group.de/en/investors/result-center.

The Q3 presentation can be downloaded here.

Key financial data of OSRAM Licht Group in the third quarter

  3rd quarter 2016 3rd quarter 2015 Change nominal
Revenue 1,442 1,353 6.6%
EBITDA 117 164 (28.8%)
EBITDA, adjusted 201 188 6.7%
EBITA 61 100 (39.1%)
…Margin 4.2% 7.4% (320 bps)
EBITA, adjusted 145 129 12.7%
…Margin 10.1% 9.5% 50 bps
Income before taxes 48 89 (46.6%)
Net income 28 64 (56.8%)
Free cash flow (124) 140 n/a
Employees (‘000) 33.9 32.4 4.6%

(Unaudited figures. Figures in millions of euros, margins in percent, employees as of June 30. Negative values in brackets.)

Reporting segment performance in the third quarter2

  3rd quarter 2016 3rd quarter 2015 Change nominal
Specialty Lighting      
…Total revenue 527 470 12.1%
…EBITA 57 66  
…EBITA, adjusted 61 70  
Lighting Solutions & Systems      
…Total revenue 261 230 13.7%
…EBITA (3) (10)  
…EBITA, adjusted 0 (9)  
Opto Semiconductors      
…Total revenue 371 333 11.5%
…EBITA 82 63  
…EBITA, adjusted 82 63  
Lamps      
…Total revenue 447 458 (2.3%)
…EBITA 6 16  
…EBITA, adjusted 25 27  

(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: 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.