EQS-Ad-hoc: ams-OSRAM AG / Key word(s): Quarter Results/Half Year Results
ams-OSRAM AG: ams OSRAM delivers solid revenues in Q2 and continues
turn-around with profitability at the upper end of the guided range
26-Jul-2024 / 07:15 CET/CEST
Disclosure of an inside information acc. to Article 17 MAR of the
Regulation (EU) No 596/2014, transmitted by EQS News - a service of EQS
Group AG.
The issuer is solely responsible for the content of this announcement.
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Ad hoc Announcement pursuant to Art. 53 Listing Rules of SIX Swiss
Exchange
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ams OSRAM delivers solid revenues in Q2 and continues turn-around with
profitability at the upper end of the guided range
• Q2/24: revenues EUR 819m, adj. EBIT EUR 56m (6.8%), adj. EBITDA EUR
135m (16.5%)
• Q3/24: expected third quarter revenues of EUR 830 to 930m and adj.
EBITDA margin of 17% to 20%
• H2/24: significantly improved free cash flow due to lower capex and
higher profitability
• Implementation of Re-establish-the-Base program progressing well,
approx. EUR 60m savings realized to date
• Design-win momentum for long-term structural growth continuing, around
EUR 2.5bn (life-time-value) design-wins in H1/2024
Premstaetten, Austria, and Munich, Germany (26 July 2024) -- ams OSRAM
delivers solid Q2 revenues of EUR 819m on the back of structural growth in
automotive semis, continues turn-around with adj. EBITDA margin of 16.5%
at the upper end of the guided range
“A year ago, we announced our strategic efficiency program
‘Re-establish-the-Base’ which aims at focusing the company on its
profitable and structurally growing core. We are fully on track in terms
of implementing the anticipated profitability improvements, while economic
headwinds are increasing. Our long-term structural growth prospects are
underpinned by the unabated momentum in winning new future business.” said
Aldo Kamper, CEO of ams OSRAM.
Q2/24 financial update
ams OSRAM announces revenues of EUR 819 million for the second quarter
2024, at the midpoint of the guided range of EUR 770 – 870 million. The
typical annual seasonality of the automotive lamps business drives the EUR
28 million decrease compared to the previous quarter. The semiconductor
business was resilient, with year-over-year structural growth in
automotive, a stabilization of the industrial business on the back of
horticulture and professional lighting, and a decline in the consumer
business due to a gradual ramp-down of legacy projects. Year-over-year,
revenues declined slightly by 4%, on a like-for-like and constant currency
basis a decline of around 3%. Reasons for this are mainly a weaker
industrial & entertainment lamps business and lower revenues from the auto
OEM lamps business, while the auto lamp replacement business remained
strong. The semiconductor business with EUR 596 million stayed essentially
flat year-over-year with a -1% decline. The average EUR/USD exchange rate
stood at 1.08.
The adjusted EBITDA (adjusted earnings before interest, taxes,
depreciation, and amortization, i.e. operating margin adjusted for
special, non-operational effects) came in at EUR 135 million, i.e. at a
16.5% adj. EBITDA margin, at the upper end of the guided range of 14% -
17%. Higher factory loading and savings from the ‘Re-establish-the-Base’
program are key contributors, which is especially evident from the
improved performance of the CSA segment. In OS, a catch-up impact from the
IPCEI funding scheme also supported the profitability increase.
The adjusted EBIT (adjusted earnings before interest and taxes, i.e.
operating margin adjusted for special, non-operational effects) margin
came in at 6.8%. The adjusted EBIT amounted to EUR 56 million.
Re-establish-the-Base program implementation status
A year ago, on 27 July 2023, the company announced its strategic
efficiency program ‘Re-establish-the-Base’, which was aimed at focusing
the company on its profitable, structurally growing core. It targets EUR
75 million run-rate savings by end of FY2024 and EUR 150 million run-rate
savings by end of FY2025 compared to 2023 actuals.
To date, the company has realized around EUR 60 million savings, fully on
track to reach the EUR 75 million run-rate savings end of FY24. Recent
implementation successes are especially evident when looking at the
profitability improvement of the segment CSA.
Besides substantial cost optimization, significant progress has been made
in addressing the company’s non-core semiconductor portfolio which had
2023 revenues of around EUR 300 to 400 million. The sale of assets of the
passive optical components business to Focuslight Inc. was announced on 7
May 2024 (closing expected in Q3), and the restructuring and optimization
of the CMOS image sensor business shortly before that. Preparations to
exit the remainder of the non-core portfolio are ongoing.
Semiconductor business update
Opto Semiconductors segment (OS)
Revenues for opto-electronic semiconductors increased by EUR 27 million to
EUR 372 million in Q2/24 compared to EUR 345 million in Q1/24. Adjusted
EBITDA stood at EUR 84 million, representing an adjusted EBITDA Margin of
23%.
The profitability is still impacted by factory underutilization, higher
research & development expenses and significantly less capitalization of
research and development costs after the cancellation of the cornerstone
microLED project.
CMOS sensors and ASICs segment (CSA)
Revenues for CMOS sensors and ASICs came in at EUR 224 million in Q2/24,
down from EUR 233 million in Q1/24. The EUR 9 million decline is mainly
due to a consumer legacy business ramping down. Adjusted EBITDA stood at
EUR 21 million, representing an adjusted EBITDA Margin of 9%, which is a
significant improvement from EUR 5 million and 2% EBITDA Margin in Q1/24.
The steep increase is directly related to implementing the
‘Re-establish-the-Base’ program.
The industrial and medical businesses are still suffering from an
inventory correction in the supply chain, resulting in high
underutilization cost.
Semiconductors industry dynamics
Revenues from the two semiconductor business units represent 73% of Q2/24
revenues, or correspondingly EUR 596 million. This compares to EUR 600
million a year ago, a slight minus 1% decline. As expected, end-markets
continued to show different dynamics.
Automotive:
The automotive business continued to perform well with a 6% year-over-year
increase despite the anticipated normalization of sales in China.
Especially the emitters for automotive applications were in high demand in
both new and existing platforms.
Industrial & Medical (I&M):
The business showed a mixed performance and landed on a comparable level
as a year ago. Whilst medical technology and industrial capital goods
businesses are still very muted due to inventory corrections, professional
lighting applications demand rebounded. Business in horticulture
applications increased year-over-year based on our design-wins thanks to
having the most efficient product in the market. Also, individual new
products, such as blue lasers, were in high demand.
Consumer:
While Android consumer business showed strong growth, the ramp down of
legacy customer-specific projects caused a net decrease year-over-year.
New business wins – Design-wins:
The company continues to win significant new future business with unabated
momentum across all product categories of the core portfolio.
Year-to-date, around EUR 2.5 billion of new future business was recorded,
measured in estimated life-time-value of each individual design won.
Lamps & Systems segment (L&S)
The Lamps & Systems segment represented 27% of Q2/24 revenues, equaling
EUR 223 million.
Adjusted EBITDA in Q2 came in at EUR 39 million or 18% adjusted EBITDA
margin fully in line with fall-through from the revenue dynamics including
the positive inventory revaluation effect in the first quarter. In terms
of industry dynamics, automotive performed as expected in terms of its
seasonal pattern. Industrial & entertainment markets also performed as
expected.
Automotive:
The automotive aftermarket business went into its seasonal downswing
whilst the OEM business was stable – fully in line with expectations. The
company typically sees its strongest demand in Q4 and Q1 of a year when
high halogen bulb replacement rates can be seen in the European and North
American aftermarket.
Specialty Lamps:
Industrial and professional entertainment markets continued to show weak
demand in light of a persistent inventory correction.
Comments on additional key financial figures
The adjusted gross margin improved by 130 basis points quarter over
quarter, and 190 basis points year-over-year due to improved factory
loading and contributions from the ‘Re-establish-the-Base’ program.
The adjusted net result came in at EUR -1 million in Q2/24 down from EUR
31 million a year ago and up from EUR -35 million in the first quarter,
primarily driven by the gross profit improvements mentioned above.
Consequently, second quarter adjusted diluted earnings per share came in
at EUR 0.0, higher than the EUR -0.04 in the previous quarter.
The IFRS net result was EUR -41 million in Q2/24 after EUR -710 million in
the first quarter, which included transformation expenses of EUR -632
million (of those EUR 513 million impairments) related to the cancellation
of the microLED cornerstone project. For this, the diluted IFRS earnings
per share came in at EUR -0.04 in Q2/24, after EUR -0.71 in Q1/24.
Operating cash flow, which includes net interest paid, came in again at
EUR 55 million in Q2/24.
Cash flow from investments into PPE and intangibles, or CAPEX, stood at
EUR -176 million compared to EUR -120 million in the previous quarter –
negatively impacted by microLED equipment that could not be cancelled.
Nevertheless, cash flow from CAPEX was substantially lower than a year
ago.
Free cash flow – defined as operating cash flow including net interest
paid minus cash flow from CAPEX plus proceeds from divestments – came in
at EUR -119 million in Q2/24.
Key financial figures
EUR millions Q2 2024 Q1 2024 QoQ Q2 2023 YoY
(except per share data)
Revenues 819 847 -3% 851 -4%
Gross Margin adj. 29.7% 28.4% +130 bps 27.8% +190 bps
Operating income (EBIT) adj.^1) 56 44 +27% 50 +12%
Operating margin (EBIT) adj.^1) 6.8% 5.2% +160 bps 5.9% +90 bps
EBITDA adj. 135 124 +9% 143 -6%
EBITDA margin adj. 16.5% 14.6% +190 bps 16.8% -30 bps
Net result adj. -1 -35 -97% 31 -103%
Diluted EPS adj. (in EUR)^1)2) 0.0 -0.04 n/a 0.12 n/a
Net result (IFRS) -41 -710 -94% -1,342 -97%
Diluted EPS (IFRS, in EUR) ^ 2) -0.04 -0.71 n/a -5.14 n/a
Operating cash flow ^3) 55 55 0% 202 -73%
Cash flow from CAPEX ^4) -176 -120 +47% -202 -33%
FCF (incl. net interest paid) -119 -60 +98% 22 -641%
Net debt 1,576 1,399 +13% 2,034 -23%
Net debt (incl. SLB) 5^) 1,977 1,793 +10% 2,034 -3%
^1)^ ^ Adjusted for M&A-related, transformation and share-based
compensation costs, results from investments in associates and sale of
businesses
^2) Earnings per share are not comparable between the years due to the
capital increase on December 7, 2023 whereby additional 724,154,662 shares
were issued
^3) From Q1 2024, operating CF includes net interest paid; 2023 figures
reclassified for comparison
^4) Cash flow from investments in property, plant, and equipment and
intangibles (such as capitalized R&D)
^5) Incl. EUR 401m equivalent from SLB Malaysia transaction closed in
December 2023
Quarter-over-quarter, the net debt position increased to EUR 1,576 million
in Q2/24 after EUR 1,399 million in Q1/24 due to a lower gross cash driven
by still elevated CAPEX and the annual payment of the guaranteed dividend
for the OSRAM minority shares.
When including EUR 401 million equivalent from the Sale-and-Lease Back
Malaysia transaction (booked under other financial liabilities), the net
debt position increased accordingly to EUR 1,977 million in Q2/24
compared to EUR 1,793 in Q1/24.
Update of transformation costs
The company excludes transformation costs from its operational performance
measures, i.e. adj. EBITDA and adj. EBIT. Transformation costs in 2024 are
mainly driven by the adjustment of its microLED strategy and its
‘Re-establish-the-Base’ program.
Adjusting the microLED strategy led to impairment charges of EUR 513
million and transformation costs of EUR 119 million in Q1/24, including
non-cash accruals. In Q2/24, the company recorded a EUR 7 million gain due
to a reversal of provisions. In summary, the company now expects in total
around EUR 680 million of transformation cost related to adjusting the
microLED strategy including impairments (from previously EUR 700 million).
Transformation costs related to ‘Re-establish-the-Base’ were EUR 6 million
in Q2/24, approximately the same in Q1/24. For FY 2024, the company
expects an estimated EUR 25 million.
Moreover, additional details on the bridge from EBITDA according to IFRS
to adj. EBITDA can be found in the investor presentation on the company’s
website.
Status of outstanding OSRAM minority shares
On 30 June 2024, the Group held around 86% of OSRAM Licht AG shares. The
total liability for minority shareholders’ put options stood at EUR 605
million at the end of Q2/24 compared to EUR 610 million at the end of
Q1/24.
The company has an undrawn Revolving Credit Facility (RCF) of EUR 800
million in place. The RCF is primarily in place to cover any further
significant exercises under the 'domination and profit and loss transfer
agreement (DPLTA)’ put option but could also be drawn for general
corporate and working capital purposes.
Third quarter 2024 Outlook
Looking at the semiconductor segments, the company sees weakening demand
for its automotive semiconductor products in view of the recently reduced
global light vehicle production forecast for H2/24. Our increasing content
per vehicle balances a softer car production to a certain extent. The
demand from industrial and medical markets remains very muted in some
segments. The outlook for shipments into consumer device applications
continues to be robust given the ramp of some new products.
Looking at the L&S segment, automotive aftermarket for halogen lamps will
see the beginning of its typical seasonal rebound towards the end of the
summer.
As a result, the group expects third quarter revenues to increase driven
by the ramp of new products and seasonality effects despite persistent
weakness in industrial & medical businesses and land in a range of EUR 830
– 930 million. The adj. EBITDA is expected to increase to 17% - 20% driven
by revenue fall-through and further contributions from the
‘Re-establish-the-Base’ program. The EUR/USD exchange rate is assumed to
be 1.10.
Comments on second half of 2024
The company continues to expect second half 2024 revenues to improve
compared to the first half, primarily driven by the ramp of design wins in
the semiconductor segment secured earlier. The rebound of the industrial
and medical business segments undergoing an inventory correction is no
longer expected in 2024. Demand for its automotive semiconductor products
is weakening in view of the downward revised global light vehicle
production forecast for the second half of 2024.
In case certain capital grants expected in 2024 shift out to 2025, the
CAPEX for FY2024 would be around EUR 500 to 550 million (including
capitalized R&D and rolled-over accounts payable related to PPE from
2023), instead of the previously expected range below EUR 450 million.
The company expects free cash flow to improve significantly in the second
half of 2024 due to lower CAPEX and higher profitability. It continues to
target a positive free cash flow before net interest paid for the full
year 2024.
Half-year report and additional Information
Additional financial information for the second quarter 2024 as well as
the half year report for the first half of 2024 is available on the
company (1)website. The second quarter 2024 investor presentation incl.
detailed information is also available on the company (2)website.
ams OSRAM will host a press call as well as a conference call for analysts
and investors on the second quarter results on Friday, 26 July 2024. The
conference call for analysts and investors will start at 10.00am CEST and
can be joined via (3)webcast. The conference call for journalists will
take place at 11.15am CEST.
About ams OSRAM:
The ams OSRAM Group (SIX: AMS) is a global leader in intelligent sensors
and emitters. By adding intelligence to light and passion to innovation,
we enrich people’s lives.
With over 110 years of combined history, our core is defined by
imagination, deep engineering expertise and the ability to provide global
industrial capacity in sensor and light technologies. We create exciting
innovations that enable our customers in the automotive, industrial,
medical and consumer markets to maintain their competitive edge and drive
innovation that meaningfully improves the quality of life in terms of
health, safety and convenience, while reducing impact on the environment.
Our around 20,000 employees worldwide focus on innovation across sensing,
illumination and visualization to make journeys safer, medical diagnosis
more accurate and daily moments in communication a richer experience. Our
work creates technology for breakthrough applications, which is reflected
in over 15,000 patents granted and applied. Headquartered in
Premstaetten/Graz (Austria) with a co-headquarters in Munich (Germany),
the group achieved EUR 3.6 billion revenues in 2023 and is listed as
ams-OSRAM AG on the SIX Swiss Exchange (ISIN: AT0000A18XM4).
Find out more about us on (4)https://ams-osram.com
ams is a registered trademark of ams-OSRAM AG. In addition, many of our
products and services are registered or filed trademarks of ams OSRAM
Group. All other company or product names mentioned herein may be
trademarks or registered trademarks of their respective owners.
Join ams OSRAM social media channels: (5)>Twitter (6)>LinkedIn
(7)>Facebook (8)>YouTube
For further information
Investor Relations Media Relations
ams-OSRAM AG ams-OSRAM AG
Dr Juergen Rebel Bernd Hops
Senior Vice President Senior Vice President
Investor Relation Corporate Communications
T: +43 3136 500-0 T: +43 3136 500-0
(9)investor@ams-osram.com (10)press@ams-osram.com
End of Inside Information
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26-Jul-2024 CET/CEST News transmitted by EQS Group AG. www.eqs.com
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Language: English
Company: ams-OSRAM AG
Tobelbader Straße 30
8141 Premstaetten
Austria
Phone: +43 3136 500-0
E-mail: investor@ams-osram.com
Internet: https://ams-osram.com/
ISIN: AT0000A18XM4
WKN: A118Z8
Listed: Regulated Unofficial Market in Berlin, Dusseldorf, Frankfurt,
Munich, Stuttgart, Tradegate Exchange; BX, SIX, Vienna Stock
Exchange (Vienna MTF)
EQS News ID: 1954633
End of Announcement EQS News Service
1954633 26-Jul-2024 CET/CEST
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