ams OSRAM Q2 and Half-Year 2022 Analysis: Revenue “Fully Matching Expectations”

ams OSRAM (SIX:AMS, OTCPK:AMSSY) is on a long road to reconstitute itself as a more stream-lined, higher-margin leader in optical solutions, leveraging a unique product and technology portfolio for applications in sensing, illumination and visualization.  Its product range includes LED emitters, optical components & micro-modules, detectors and sensor interfaces & processors for use in consumer, automotive, industrial and medical applications.

ams, an Austrian company founded in 1981, had a history of growth through acquisition.  In 2020, it purchased OSRAM Licht, a Munich-based leading global manufacturer of lamps and lighting solutions.  Since then, ams OSRAM has been paring away the low-margin legacy OSRAM business. The Q2 and half year results 2022 included announcement of the last major planned disposals for the integration of ams OSRAM – the architectural lighting business Traxon to be sold to “an Asian industry buyer” and the Digital Systems(LED power supplies) businesses in Europe and Asia to be sold to Inventronics.  Also in Q2, the company successfully closed on the Fluence transaction (sold to Signify).

ams OSRAM had a large cash inflow in Q2 as the sale of Fluence closed and CFO Ingo Bank described as “solid group leverage” the current 1.9x leverage and net debt at EUR 1.73B ($1.77B).  He noted that 95% of the outstanding debt was on a fixed rate basis.

The company tracks the percentage share of revenues by segment, end market and by region:

Q2 Revenues by Segment: 

Semiconductors          68%

Lamps & Systems        32%

Q2 Revenues by End Market:

Automotive                 40%

Industrial & Medical   36%

Consumer                   24%

H1 Revenues by Region:

APAC               51%

EMEA              31%

Americas         18%

CEO Alexander Everke responded to an anaylst’s question on ams OSRAM’s engagement on microLEDs during the earnings call, saying the company does not see meaningful competition in the areas in which they play and that ams OSRAM is extremely strong and differentiated in the red color microLED.  He also noted that they are building the first and only 8-inch wafer fab providing strong cost and performance advantages over any other competitor.  The factory is to be ready in 2024 and will support the entire LED portfolio, including microLED.

CEO Everke indicated the company is proactively implementing additional cost mitigation actions in light of the worsening macroeconomic trends.  CFO Bank gave additional detail that the extra cost mitigation measures would include both OpEx and cost of goods sold, the largest cost area for the company.  On OpEx spend, he noted that R&D would be the only area where they would not reduce cost, underlining the priority on microLED.

As for the outlook on Q3 2022, ams OSRAM provided a revenue range of EUR 1.15-1.25B ($1.17-1.28B) with operating profitability in the 6-9% EBIT margin range.  Note the long road ahead indeed as their “clear long-term target” given in the Q2 Investor Presentation(slide 5) is for EBIT margin of 20%+.

Go Deeper:

ams OSRAM Investor Presentation – Second Quarter and First Half 2022 results:

ams OSRAM Q2 and Half Year Report 2022:

ams OSRAM Webcast Conference Call – Q2 and Half Year Results 2022:

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