ams OSRAM (SIX:AMS, OTCPK:AMSSY) issued an ad hoc announcement this week, sharpening its strategy to focus the semiconductor portfolio on its profitable core, and exiting non-core semiconductor businesses. Q2 FY2023 results came in at the high end of the company’s guidance at $936M (EUR 851M) and adjusted EBIT of 5.9%. Year-over-year, the Q2 revenue was down -28%, EBIT margin percentage was 5.9% (down -290bps from 8.8%), while operating cash flow improved dramatically.
CEO Aldo Kamper took over the helm during Q1 of this fiscal year and made it clear in last quarter’s earnings call that he was not satisfied with the company’s financial performance and was working with the management team to fine tune their plan for “optimization adjustments.” The changes outlined in this week’s announcement include:
- future semiconductor portfolio focused on differentiated, intelligent sensors and emitters
- exiting non-core semiconductor business, with an annual revenue run rate of $330 to $440M (EUR 300-400M) in annual revenue
- will take non-cash impairment charges on goodwill of $1.43B (EUR 1.3B)
- Efficiency program “Re-establish the Base” with organizational changes including re-sizing of the company’s overhead and infrastructure for new revenue base (two business units instead of three in the semiconductor segment, adjustments in managerial setup of the company)
- reduction in Group Management Board to CEO and CFO only starting January 2024 as the company moves from functional management model to divisional entrepreneurship
- internal manufacturing capability to be focused only on platforms enabling differentiation
- continue select investments into disruptive, future growth areas (like microLED)
Looking ahead, ams OSRAM is expecting Q3 FY2023 revenues of $924M to $1.034B, with adjusted EBIT margin of 5.8%. The company also offered a preliminary view of FY2024 that included lower revenue base due to portfolio decision, slight positive free cash flow, and growth in the core business, assuming stabilization of end-markets.
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ams OSRAM Strategy Announcement and Q2 FY2023 Results
ams OSRAM Investor Presentation Q2 FY2023