Osram records profitable growth in the 3rd quarter

2013/07/31

Earnings trend underscores significant progress in corporate reorganization Revenue share of semiconductor-based products above 30 percent for the first time Osram raises earnings outlook slightly for current fiscal year

Osram showed a good performance in a challenging macroeconomic environment in the third quarter of fiscal 2013. Revenue rose two percent year over year on a comparable basis – excluding portfolio and currency effects – to almost €1.3 billion. Earnings before interest, taxes and amortization (EBITA) amounted to €22 million. The figure includes expenses from special items of €72 million, particularly transformation costs. The adjusted EBITA margin was 7.4 percent versus 5.8 percent in the prior-year period, reflecting positive effects of the company reorganization that has been underway since 2012 and which is well on track. The reported margin, including special items such as transformation costs, was 1.7 percent. The financial result benefited from a book gain from the planned sale of a stake in the Valeo Sylvania joint venture, resulting in net income of €14 million. In view of the developments in the third quarter, Osram is slightly raising its earnings outlook for the current fiscal year.

OSRAM Licht AG was listed on the Frankfurt and Munich stock exchanges at the beginning of July.It is now publishing preliminary quarterly results for the first time. "We can look back on a successful listing and a good third quarter. We succeeded in increasing adjusted EBITA substantially while returning to comparable revenue growth. Our transformation effort continues to make rapid progress; we are ahead of schedule regarding the planned savings. For the current fiscal year, we are raising our earnings outlook slightly and now expect a positive net income,” said Wolfgang Dehen, Chief Executive Officer of OSRAM Licht AG.

The share of semiconductor-based products (“Solid State Lighting”, or SSL) rose to 31 percent of total revenue in the third quarter. “This underscores our leading role in the transition to LED,” said Dehen.

Free cash flow increased 15 percent to €108 million.

Osram reporting segments and regional developments1

With an exceptional 18 percent increase in revenue, the business with opto-semiconductor components (Opto Semiconductors, or OS) posted the highest growth of the four reporting segments in the third quarter, thanks to strong demand across all regions and almost all lines of business. The EBITA margin reached a high level of more than 13 percent. In view of the strong quarter, Opto Semiconductors is expected to pass the billion-euro revenue mark in the current fiscal year for the first time ever.

The Specialty Lighting (SP) segment, which addresses the Automotive Lighting and Display/Optics markets, sustained its growth trend and was able to increase revenue by five percent, particularly through gains in the Americas and EMEA regions. Growth stemmed from the business with LED-based products, especially. The EBITA margin adjusted for special items came to just under 16 percent and was above 12 percent including special effects.

The largest segment Lamps & Components (L&C), which covers the product business with Lamps, Light Engines and Controls, is benefitting from the ongoing transformation, which is also reflected in an improved EBITA margin. The sales decline on a comparable basis slowed as the share of semiconductor-based products increased.

The Luminaires & Solutions (L&S) segment comprises luminaires for professional customers, products for consumers, as well as the service and solution business. L&S again posted a considerable loss in the third quarter due to structural challenges combined with declining revenues. Measures to improve the segment’s performance are currently under review.

From a regional perspective, the highest comparable revenue growth in percentage terms was recorded in the APAC region with five percent, much of which is attributable to the strong demand for opto-semiconductor components. Despite persistent economic uncertainties in the euro zone, Osram achieved a four percent gain in its EMEA business in the period under review. The Americas region, on the other hand, posted a modest decline of two percent.

Outlook for fiscal 2013

For the fiscal year ending September, the Managing Board confirms its outlook that revenue will remain stable on a comparable basis, with a modest increase in the second half of the year. The Managing Board expects EBITA adjusted for special items to rise about 20 to around 30 percent after previously forecasting a low double-digit percentage increase. The Managing Board further expects to record a positive net income in the current fiscal year. The previous outlook had called for a significantly smaller loss compared with the previous fiscal year and therefore an approach towards breaking even. The free cash flow is expected to be clearly positive in 2013.

Highlights in the third quarter

Osram is expanding its portfolio of LED lamps with many new products, including a powerful LED lamp available since June for under €10. In the course of the year, Osram will have its broadest offering of LED lamps to date with about 60 different lamp types. In addition, the company was able to conclude further essential light projects and contracts in the third quarter. For example, the company is equipping the new Taunus-Turm in Frankfurt’s banking district with more than 12,000 interior LED luminaires. Construction of the 170-meter office tower in the heart of Germany’s financial hub is scheduled to be completed this year. At the beginning of May, the Lenbachhaus art museum in Munich opened its doors again after years of refurbishment, featuring more than 170,000 LED and intelligent light controls by Osram that illuminate the works of famous artists like Kandinsky and Beuys. Osram was also once again named as “Supplier of the Year” by Continental in June. Continental bestows this award to honor exceptional achievements in the automotive sector.

A conference call held with the Managing Board of OSRAM Licht AG to present the preliminary third-quarter business results will be streamed at 9 a.m. CET today on the Internet. There, you will also be able to listen to a recording of the conference.
Conference call for journalists

Starting at 2 p.m. CET, you can follow the conference call for analysts and investors with the Managing Board.
Conference call for analysts and investors

The full report for the third-quarter results of OSRAM Licht AG will be posted on August 14, 2013, on the company’s Investor Relations homepage at www.osram.com/investors

Key financial data of OSRAM Licht Group in the third quarter

  3rd quarter 2013 3rd quarter 2012 Change
Revenue 1,278 1,298 (2%)
EBITA 22 6 267%
Margin 1.7 0.5 120 bps
EBITA, adjusted 95 75 27%
margin 7.4 5.8 160 bps
Net income 14 55 (75%)
Free cash flow 108 94 15%
Employees 35,494 40,206 (4,712)

(Preliminary, unaudited figures. In millions of euros, employees absolute as at June 30. Negative values in brackets.)

Development of reporting segments

  3rd quarter 2013 3rd quarter 2012 Change in %
Opto Semiconductors      
Total revenue 279 239 17
EBITA 38 32  
EBITA, adjusted 38 32  
Specialty Lighting      
Total revenue 359 349 3
EBITA 44 54  
EBITA, adjusted 57 58  
Lamps & Components      
Total revenue 604 649 (7)
EBITA (8) (25)  
EBITA, adjusted 29 9  
Luminaires & Solutions      
Total revenue 131 140 (7)
EBITA (23) (25)  
EBITA, adjusted (20) (22)  

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

1Osram organizes its operating business in four reporting segments. If not indicated otherwise, the changes in revenue are on a comparable basis. Regionally, the business is split up into the three regions APAC (Asia Pacific), EMEA (Europe, Middle East and Africa) and the Americas (North and South America).

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 more than 35,000 employees worldwide and generated revenue of almost €5.3 billion in fiscal 2013 (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 “Risk Factors” in the Prospectus of OSRAM Licht AG. 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.