Osram continues to show good profit performance

2015/07/29

Adjusted EBITA margin increases to 9.5 percent in the third quarter
Revenue up 12 percent; almost stable on a comparable basis
Carve-out of lamps business planned to be completed by spring 2016

Osram continued to show a good profit performance in the third quarter of fiscal 2015. EBITA1 excluding special items rose 24 percent from a year earlier to €129 million, translating into a margin of 9.5 percent. The development was particularly driven by cost savings as well as positive currency effects. The reported EBITA margin reached 7.4 percent. Revenue increased twelve percent to almost €1.4 billion due to the weakness of the euro against key currencies and the acquisition of Clay Paky. On a comparable basis, i.e. adjusted for portfolio and currency effects, revenue remained almost stable with a decline of around one percent. The revenue share of LED-based products and solutions was 44 percent in the third quarter. Net income rose to €64 million. Osram confirms the outlook for fiscal 2015 as updated in April. After the supervisory board of OSRAM Licht AG recently unanimously approved the carve-out of the general lighting lamps business, the managing board confirms the goal to complete the carve-out by the spring of 2016.

“Overall, we can look back on a good quarter,” said Olaf Berlien, Chief Executive Officer of OSRAM Licht AG. “Our current priority is the realignment of the company, which we are pursuing at full speed. The carve-out of our lamps business is in this respect just the beginning of the path toward a new Osram, which will focus on connected and smart lighting.”

Osram reporting segments in the third quarter

In the third quarter, comparable revenue in the Opto Semiconductors (OS) reporting segment rose four percent from a year earlier, supported by all reporting regions. Main drivers of this development were the automotive and industrial businesses. At 18.5 percent, the EBITA margin continued to be on a high level.

Specialty Lighting (SP), with its Automotive Lighting and Display/Optics units, also recorded a comparable revenue increase of four percent in the third quarter despite weakening automotive markets, particularly in Asia. Growth was driven by rising demand for LED-based products. Excluding special items, the adjusted EBITA margin reached 14.1 percent and benefited from positive currency effects.

The LED Lamps Systems (LLS) reporting segment covers Osram’s business with LED lamps, light engines, as well as LED drivers. The segment recorded comparable revenue growth of 36 percent from a year earlier in the third quarter. The adjusted EBITA margin improved by almost 14 percentage points to minus 6.6 percent.

As expected, revenue in the Classic Lamps Ballasts (CLB) reporting segment declined 13 percent on a comparable basis in the third quarter. In contrast, the adjusted EBITA margin improved to 8.3 percent thanks to cost savings.

The Luminaires & Solutions (LS) reporting segment comprises luminaires for professional customers as well as the service and solutions business. In the third quarter, the segment’s revenue fell 14 percent on a comparable basis. The adjusted EBITA margin was minus 11.5 percent.

Outlook for fiscal 2015

Osram confirms the outlook for fiscal 2015 as updated in April. The managing board thus expects revenue to be on the level of fiscal 2014 on a comparable basis. The adjusted EBITA margin is expected to be above 9.0 percent. In addition, the managing board anticipates both net income and return on capital employed (ROCE) to decrease sharply in the current fiscal year due to an increase in transformation costs. Free cash flow is expected with a positive triple-digit million euro figure 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 third quarter

Osram again gave an impressive demonstration of its ability to create innovation in the third quarter. At this year’s Lightfair trade show in New York City, the company’s LED lighting solution OmniPoint was recognized with an Innovation Award for the most innovative product of the year. OmniPoint is a complete lighting solution in the form of a single LED downlight installed in the center of the room. The customer uses a tablet computer to define the required light output and illumination direction for any given situation. Such innovations not only make a company stand out from the crowd – they are also highly appreciated by customers. Another good example in this respect is laser light. After the first cars from Audi and BMW were equipped with Osram laser modules last year, the volume production of such modules has now been running at Osram’s Herbrechtingen plant since May. Customers continue to be interested in this technology as laser light illuminates the road significantly further than previously used light sources and therefore increases safety on the road. Another future technology in the automotive segment is organic light-emitting diodes (OLED), which is also likely to become popular. As a leading provider, Osram aims to be represented on the road with a series OLED product from 2016. The company is also setting standards in the non-visible lighting segment: The first smartphone that can be unlocked by iris scanning with the aid of Osram infrared technology recently went on sale in Japan. In June, Osram also won a well-respected award in Germany for the development of this technology.

The company will hold a conference call for journalists with the managing board of OSRAM Licht AG today at 9:00 a.m. CEST. 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. CEST, you can follow the conference call for analysts with the managing board at www.osram.com/investors.

The full interim report of OSRAM Licht AG’s third quarter will be posted on the company’s Investor Relations homepage at www.osram.com/investors on August 7, 2015.

Key financial data of OSRAM Licht Group in the third quarter

3rd quarter 2015 3rd quarter 2014 Change
Nominal
Revenue 1,352.6 1,203.1 12.4%
EBITA 100.3 80.9 24.0%
...Margin 7.4% 6.7% 70 bps
EBITA, adjusted 128.6 103.7 24.0%
...Margin 9.5% 8.6% 90 bps
Income before taxes 89.5 67.4 32.7%
Net income 63.8 44.4 43.6%
Free cash flow 139.6 52.0 168.4%
Employees ('000) 32.4 33.9 (4.4%)

(Preliminary, not yet with review opinion, figures in millions of euros, margins in percent, employees as of June 30. Negative values in brackets.)

Reporting segment performance in the third quarter

3rd quarter 2015 3rd quarter 2014 Change
nominal
Opto Semiconductors
...Total revenue 332.8 285.5 16.6%
...EBITA 61.4 56.5
...EBITA, adjusted 61.4 56.5
Specialty Lighting
...Total revenue 467.1 378.1 23.5%
...EBITA 62.2 51.8
...EBITA, adjusted 65.7 54.3
LED Lamps & Systems
...Total revenue 167.2 109.8 52.3%
...EBITA (11.1) (22.3)
...EBITA, adjusted (11.0) (22.3)
Classic Lamps & Ballasts
...Total revenue 421.3 434.9 (3.1%)
...EBITA 23.7 15.0
...EBITA, adjusted 35.0 27.8
Luminaires & Solutions
...Total revenue 102.2 109.8 (6.9%)
...EBITA (12.0) (17.7)
...EBITA, adjusted (11.8) (16.3)

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

1Earnings before interest, taxes and amortization

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 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.