Osram’s performance in the second fiscal quarter was as expected. Revenue on a comparable basis fell by 13.5 percent to 862 million euros in the period from January to the end of March. The adjusted EBITDA margin was 8.1 percent. When preliminary key figures were published at the end of March, the lighting company had forecast a decline in sales of around 15 percent for the second quarter and an adjusted EBITDA margin in the mid to higher single-digit range. As announced at that time, the decline was due in part to the continuing weakness of the automotive, general lighting and mobile device markets. This led to high inventory levels, particularly in China. In addition, the general economic slowdown is adversely affecting business development.
Adjusted for special items, EBITDA at EUR 70 million was 56 percent below the prior-year figure, while net income was EUR minus 91 million due to transformation costs and an impairment charge in the controls business. As communicated ad hoc at the end of March, the Management Board is responding consistently to the development of the markets and plans savings of over 200 million euros by 2021.
“In our 113-year history, we have repeatedly experienced challenging times, but each time we have emerged stronger than before. Our long-term strategy of implementing new applications in the LED sector remains intact. The focus is on optical semiconductors, automotive and digital applications,” said Olaf Berlien, CEO of OSRAM Licht AG.
In the past quarter, the Opto Semiconductors division recorded a decline in sales of around 18.8 percent on a comparable basis. This reflects not only the economic effects but also the weakness in the automotive industry and general lighting. High inventories in Asia further curbed development. Sales in the automotive division were 10.6 percent lower due to reduced expectations worldwide in the automotive industry. In the Digital division, sales fell by 8.5 percent due to the weakness in general lighting and the control gear business.
As announced in March, the Management Board expects a decline in revenue from continuing operations of 11 to 14 percent, an adjusted EBITDA margin of 8 to 10 percent and a negative free cash flow of between EUR 50 million and EUR 150 million for the 2019 financial year.
In mid-February, Osram announced that management was in closer talks with Bain Capital and The Carlyle Group about a possible takeover. The due diligence process continues. As communicated from the beginning, it remains to be seen whether an agreement will be reached. The Management Board conducts the discussions in the interests of the company and thus of shareholders, employees and other stakeholders such as business partners and customers.
Beginning at 2 p.m. CEST on May 8, you can attend the analysts’ conference with the Managing Board at http://services.choruscall.eu/links/osram190508ir.html.
Selected key figures for the OSRAM Light Group in the second quarter
| 2nd quarter 2019 | 2nd quarter 2018 | Change nominal | |
| Revenue | 862 | 938 | (8.2%) |
| EBITDA | 11 | 146 | (92.4%) |
| …Margin | 1.3% | 15.5% | (1423bps) |
| Adjusted EBITDA1 | 70 |
159 | (55.9%) |
| …Margin | 8.1% | 16.9% | (880bps) |
| Profit after tax | (91) | 56 | n.a. |
| Free Cash Flow | (76) | (114) | 33.1% |
| ‘000 Employees | 25.0 | 25.6 | (2.0%) |
(Provisional, unaudited figures from continued operations. Items stated in € million, margin in %, employees as at March 31. Negative values in brackets.)
(1Adjustment for special items (S.I.) includes e.g. transformation costs, substantial legal and regulatory matters, and costs related to mergers and acquisitions activities.)
Development of the reporting segments in the second quarter
| 2nd quarter 2019 | 2nd quarter 2018 | Change nominal | |
| Opto Semiconductors | |||
| …Revenue | 361 | 426 | (15.3%) |
| …EBITDA | 8 | 105 | (92.3%) |
| …adjusted EBITDA | 53 | 105 | (49.7%) |
| Automotive | |||
| …Revenue | 446 | 482 | (7.4%) |
| …EBITDA | 39 | 64 | (38.9%) |
| …adjusted EBITDA | 43 | 67 | (35.9%) |
| Digital | |||
| …Revenue | 222 | 215 | 3.0% |
| …EBITDA | (8) | 0 | n.a. |
| …adjusted EBITDA | (4) | 4 | n.a. |
(Provisional, unaudited figures. Items stated in € million. Negative values in brackets.)
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 networked, intelligent lighting solutions in buildings and cities. OSRAM utilizes the infinite possibilities of light to improve the quality of life for individuals and communities. OSRAM’s innovations will enable people all over the world not only to see better, but also to communicate, travel, work, and live better. As of the end of fiscal year 2018 (September 30), OSRAM had approximately 26,200 employees worldwide. It generated revenue of more than €3.8 billion from continued operations in fiscal year 2018. The company is listed on the stock exchanges in Frankfurt and Munich (ISIN: DE000LED4000; WKN: LED400; trading symbol: OSR). Additional information can be found at www.osram.com.
Disclaimer
This document contains forward-looking statements and information, i.e. statements about events that lie in the future rather than the past. These forward-looking statements can be identified by words such as ‘expect’, ‘want’, ‘anticipate’, ‘intend’, ‘plan’, ‘believe’, ‘seek’, ‘estimate’, ‘will’, and ‘predict’. Such statements are based on current expectations and certain assumptions made by OSRAM’s management, so they are subject to various risks and uncertainties. A wide range of factors, many of which are beyond OSRAM’s control, have an influence on the business activities, success, business strategy, and results of OSRAM. These factors may cause the actual results, success, and performance of OSRAM to differ significantly from those expressly or implicitly communicated in the forward-looking statements or from those that are expected on the basis of past trends. In particular, these factors include, but are not limited to, the circumstances described in the report on risks and opportunities contained in the annual report of the OSRAM Licht Group. If one or more of these risks or uncertainties materializes, or should the underlying assumptions prove incorrect, the actual results, performance, and success of OSRAM may differ significantly from those described in forward-looking statements as being expected, anticipated, intended, planned, believed, sought, estimated, or projected. OSRAM assumes no obligation, nor does it intend, to update these forward-looking statements above and beyond the legal requirements or to adjust them in light of unexpected developments. Due to rounding, numbers presented in this and other reports may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures to which they relate.