Active crisis management impacts Osram's third quarter

2020/07/29

  • Revenue decline of nearly 30 percent less than expected compared to the industry
  • Free cash flow negative at only 7 million euro
  • Photonics champion confirms current annual forecast
  • Changes in the Supervisory Board

Osram mastered the third fiscal quarter better than expected compared to the main sales markets thanks to decisive countermeasures at a global level. Although revenue on a comparable basis fell by 29.4 percent to 606 million euros within a year due to the impact of the Coronavirus crisis, EBITDA before special items was well above expectations with negative 27 million euros. While the Automotive (AM) business unit was, as expected, hit hardest by the slump in sales, Opto Semiconductors (OS) developed relatively positively. Company-wide free cash flow was only minus 7 million euros due to effective management of the working capital. "The success of our Covid-19 measures and our liquidity management are clearly reflected in our quarterly figures. In the third quarter, we already achieved the overall savings that we had forecasted for the whole year," said Olaf Berlien, CEO of OSRAM Licht AG. "Our business performance shows that we were well prepared for the crisis. In particular, our development in North America and China makes us confident that we will achieve our current forecast for the year despite all adversities".

In the third quarter, the Coronavirus crisis unsurprisingly left its deepest traces in the AM business unit. AM revenues fell by 35.7 percent year-on-year to 282 million euros. The continued weak development of margins in the Osram Continental joint venture also made a decisive contribution to this decrease. In addition, an impairment loss of 48 million euros had to be recorded there.

Adjusted EBITDA for the entire AM business unit was minus 23 million euros. Meanwhile, the cash outflow was limited to 19 million euros. The decline in the OS business unit was significantly less severe. OS revenue decreased by 19 percent to 297 million euros. Adjusted EBITDA was 36 million euros. The operating margin remained in the double-digit range at 12.2 percent. Free cash flow was again positive at 24 million euros. The Digital (DI) business unit was in some areas significantly affected by revenue declines, for example in cinema lamps and stage lighting. Consequently, revenues decrease by around 31 percent to 159 million euros. Adjusted EBITDA was minus 23 million euros. In contrast, free cash flow was clearly positive at 17 million euros.

The global contingency plan, as well as the local hygiene and operating concepts for preventing Coronavirus, have proven their effectiveness at Osram. Thanks to a bundle of measures in and around the workplace, there were very few infections among the approximately 22,000 employees, and the restrictions in production remained limited.

Nevertheless, the current final quarter of the 2020 financial year will continue to be economically influenced by the pandemic. However, Osram is showing visible signs of recovery, particularly in Asia. The production sites in these regions are producing almost as much as before the crisis began. But the economic recovery in Europe has not fully occurred. Overall, the Management Board sees itself well on track to meet the annual forecast adjusted in June.

Changes in the Supervisory Board

Osram Supervisory Board members Roland Busch, Frank H. Lakerveld and Arunjai Mittal resigned from their mandates on Tuesday evening. They are followed by the independent management consultant Hans-Peter Metzler, ams board member Thomas Stockmeier and ams works council member Johann Christian Eitner. “I would like to thank Mr. Busch, Mr. Lakerfeld and Mr. Mittal for their support over the recent few years and look forward to a beneficial working relationship with their three successors who have been appointed to the Supervisory Board by our majority shareholder ams," explained Olaf Berlien, CEO of Osram.

From 2:00 p.m. CEST on July 29, you can follow the analysts' conference with the Management Board at the following link: https://87399.choruscall.eu/links/osram200729ir.html

 

Selected key figures for the OSRAM Licht AG (continued operations) in the third quarter

3rd quarter 2020 3rd quarter 2019 Change nominal
Revenue 606
850
(28.7%)
Comp. revenue growth1 (29.4%)
   
Adjusted EBITDA2 (27)
58 n.a. 
…Margin (4.5%)
6.8%
(1130bp)
Profit after taxes (140)
(35) n.a.
Free Cash Flow (7)
91
n.a.
'000 Employees 22 24 (10.2%)

(unaudited figures. Figures in millions of euros, margins in percent, employees as on June 30. Negative values in parentheses.)

( 1adjusted for currency and portfolio effects)

( 2Adjusted for special items including e.g. transformation costs, significant legal and regulatory issues, as well as M&A-related costs.)


Development of the reporting segments in the third quarter

3rd quarter 2020 3rd quarter 2019 Change nominal
Opto Semiconductors
…Revenue 297
363
(18.2%)
...comp. revenue growth1
(19.0%)     
…adjusted EBITDA2 36
60
(39.8%)
...Free Cash Flow  24
81
(69.7%) 
Automotive
…Revenue 282
432
(34.8%)
...comp. revenue growth1 (35.7%)


…adjusted EBITDA2 (23)
22
n.a.
...Free Cash Flow  (19)
31
n.a.
Digital
…Revenue 159 232
(31.5%)
...comp. revenue growth1 (31.3%)


…adjusted EBITDA2 (23)
(7)
n.a.
...Free Cash Flow  17
0
n.a. 

(unaudited figures in millions of euros. Negative values in parentheses.)

(1adjusted for currency and portfolio effects)

(2Adjusted for special items, including e.g. transformation costs, significant legal and regulatory issues, as well as M&A-related costs.)

 

ABOUT OSRAM

OSRAM, based in Munich, is a leading global high-tech company with a history dating back more than 110 years. Primarily focused on semiconductor -based technologies, our products are used in highly diverse applications ranging from virtual reality to autonomous driving and from smartphones to smart and connected lighting solutions in buildings and cities. OSRAM uses the endless possibilities of light to improve the quality of life for individuals and communities. OSRAM’s innovations enable people all over the world not only to see better, but also to communicate, travel, work and live better. OSRAM has approximately 23,500 employees worldwide as of end of fiscal 2019 (September 30) and generated revenue of about 3.5 billion euros from continuing activities. 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 outside the control of OSRAM, have an influence over OSRAM's business activities, achievement, business strategies and results. These factors may cause the actual results to differ materially from the statements of OSRAM, successes and achievements to results, performance or achievements expressed or implied in the forward-looking statements or on the basis of earlier trends can be expected. 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