EQS-Adhoc: ams-OSRAM AG: ams OSRAM sharpens portfolio towards profitability and structural growth; announces profitability for Q2 at the upper end of guidance
EQS-Ad-hoc: ams-OSRAM AG / Key word(s): Strategic Company Decision/Half
Year Results
ams-OSRAM AG: ams OSRAM sharpens portfolio towards profitability and
structural growth; announces profitability for Q2 at the upper end of
guidance
27-Jul-2023 / 21:20 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 sharpens portfolio towards profitability and structural growth;
announces profitability for Q2 at the upper end of guidance
• Future portfolio will be focused on differentiated, intelligent
sensors and emitters, with an increased commitment towards
structurally attractive Automotive, Industrial and Medical markets
• Company continues to pursue differentiated opportunities in Consumer
markets, such as microLED
• Group will exit non-core semiconductor businesses with revenue
run-rate of EUR 300 to 400 million
• Will take non-cash impairment charges on goodwill of EUR 1.3 billion
• “Re-establish the Base” efficiency program including organizational
adjustments, yielding EUR 150 million adj. EBIT run-rate improvements
by end of 2025
• Management Board will be reduced to CEO and CFO effective January 1st,
2024
• Q2 revenues of EUR 851 million and adj. EBIT margin of 5.9% at the
upper end of the guided range
• Expected Q3 revenues of EUR 840-940 million with adj. EBIT margin of
5-8%
• Preliminary view on FY2024: revenues will decline in 2024 due to
portfolio decisions; Free Cash Flow slightly positive; core business
to outgrow its target markets assuming end-markets stabilize
• Target Financial Model revised: 6%-10% revenue CAGR based on the
reduced base and adj. EBIT of approximately 15% in 2026
• Re-financing considerations are making good progress
Premstaetten, Austria, and Munich, Germany (27 July 2023) — ams OSRAM
(SIX: AMS) presents a strategic re-alignment of the group while reporting
second quarter financial results in line with the company’s expectation
range.
“Over the past months, we have completed a deep analysis of the company to
determine the path forward. We have a very strong core, yet we need to
take significant steps to improve our performance. We are sharing key
decisions today.” says Aldo Kamper, CEO ams OSRAM.
The company is re-focusing its semiconductor portfolio on its profitable
core in differentiated, intelligent sensor and emitter components. The
non-core and lower performing portfolio with revenues of around EUR 300 to
400 million – including amongst others – passive Optical Components, will
be exited.
The automotive and specialty lighting business (Lamps & Systems Segment)
with its expanding market leadership position in automotive lamps will
continue to contribute meaningfully to the Group’s profitability.
ams OSRAM will expand its leading positions in the relevant automotive,
industrial and medical (AIM) semiconductor markets. The Group will
continue to pursue specific opportunities in the consumer device
semiconductor market in product segments where it can achieve sustainable
differentiation through cutting-edge innovation. It will focus its
internal manufacturing capability on only those platforms that enable it
to sustain differentiation versus competitors.
Going forward, investments in the core business such as high-performance
LEDs and lasers, mixed-signal analog ICs and sensors will be strengthened
further. The Group will continue selected investments into disruptive,
future growth areas, such as microLED, but pursue a more balanced resource
allocation between emerging and established opportunities.
The “Re-establish the Base” program targets annual savings of EUR 150
million by the end of 2025, approximately half of which is targeted to be
realized by the end of 2024. The one-time costs of the program are
estimated at EUR 50 million.
As part of this program, ams OSRAM will realize the benefits from the
portfolio focusing decisions in the Semiconductor segment, as well as
appropriately size the company’s overhead and infrastructure to the new
revenue base. Adjustments in the managerial setup of the company will be
introduced to strengthen the organization’s ability to monetize its
innovation power. This entails forming two Business Units (from previously
three) in the Semiconductor segment – one dedicated to emitters, the other
dedicated to sensor and analog mixed signal ICs, both with clear
end-to-end ownership.
With the divisional entrepreneurship strengthened, the Group moves away
from a functional management model in the Management Board. As a
consequence, the Group’s Management Board will be reduced to CEO and CFO,
effective January 1^st, 2024.
In view of the current macro-economic environment, a careful look at the
prospects of each business line including some low-performing consumer
businesses, revealed that the outlook required a significant reset. This
led to non-cash impairment charges on goodwill of EUR 1.3 billion. The
outlook for our core business remains positive.
The Group expects to grow its revenues with a CAGR of 6-10% 2023 to 2026
from the reduced base which means the new semiconductor core portfolio in
the Semiconductor segment in addition to the Lamps & Systems segment.
At this revenue level and upon full implementation of its “Re-establish
the Base” program, ams OSRAM expects to realize an adjusted annual
operating margin (adjusted EBIT) of approximately 15% by 2026 onwards.
The Group expects to return to its 10% CAPEX of revenues over the cycle in
2025 after the currently elevated CAPEX levels driven by additional
investment into establishing its new and unique 8” microLED technology
platform.
Besides its progressing re-financing activities, cash-in from the exit of
Semiconductor non-Core businesses and the improved cash flow generation of
the core portfolio will also contribute to strengthening the balance
sheet.
“Our innovation power helps simplify an increasingly complex world. As we
rebuild around our core business, we will benefit from structural growth
trends while making the company stronger in target markets with more
differentiated offerings. It’s about being a reliable partner to all our
stakeholders,” explains Aldo Kamper. “Profitability and monetizing
innovation is put at the center of our thinking, whilst keeping our
passion for cutting-edge technology that helps make the world safer,
simpler and more efficient. This is what I will stand for together with
the management team.”
Q2 financial and business update
The Group reports second quarter revenues of EUR 851 million and adj.
operating margin of 5.9% in line with its guidance. Excluding
deconsolidation effects of EUR 79 million, which includes the sale of
Digital Systems Eurasia in Q1, revenues came in essentially flat compared
to the first quarter. Profitability improved slightly, coming in at the
upper end of the guidance, but remained subdued especially in view of
significant underutilization charges from its production and adverse
product mix due to the seasonality in the L&S segment.
The Semiconductor segment, representing 71% of Q2 revenues, or EUR 600
million, showed mixed traction across the various end-markets. The
automotive business showed normalizing order-patterns after almost two
years of erratic behavior and inventory corrections in the wake of the
various macro-economic shocks to the automotive supply chain. Industrial
and Medical business performed better than in Q1, but still showed the
typical mixed behavior during a macro-economic weak period with certain
applications running well such as laser welding and others running very
soft such as hyper-red LEDs for Horticulture lighting. The Consumer
business showed signs of improvement with an 18% quarter-on-quarter
increase due to higher sales from existing supply relationships. Overall,
the Consumer business remains challenging for the Group compared to
previous levels a year ago as the smartphone market has contracted,
certain designs reach gradually End-of-Life, price pressure remains high
and won designs are not yet launching until 2024.
The Lamps & Systems segment, representing 29% of Q2 revenues, or EUR 251
million, recorded robust revenues in spite of the typical seasonal decline
in the Automotive aftermarket lamps business. The specialty lamps for
entertainment and industrial applications sold as expected. Within that,
the specialty lamps for semiconductor manufacturing equipment saw
softening demand due to the global slowdown in the sector.
With the non-cash impairment of EUR 1.3 billion the IFRS net result was
negative at Euro 1.3 billion. Operating Cash Flow increased significantly
to EUR 232 million up by EUR 70 million compared to the first quarter.
Quarterly financial summary
EUR millions Q2 2023 Q1 2023 QoQ Q2 2022 YoY
(except per share data)
Revenues 851 927 -8% 1,183 -28%
Gross margin adj.^1) 27.8% 29.3% -150 bps 31.6% -380 bps
Result from operations (EBIT) – 50 50 0% 104 -52%
adj.^1)
EBIT margin in % ^1) 5.9% 5.4% +50 bps 8.8% -290 bps
Net result adj.^1) 31 6 464% -54 N/A
Diluted EPS adj.^1) 0.12 0.02 -0.21
Diluted EPS adj. (in CHF)^1)2) 0.12 0.02 -0.21
Operating Cash Flow 232 162 43% 100 132%
Net debt 2,034 1,940 5% 1,727 18%
^1)^ Excluding M&A-related, transformation and share-based compensation
costs, results from investments in associates and sale of businesses
^2)^ Earnings per share in CHF were converted using the average currency
exchange rate for the respective periods
“We were pleased to see some stabilizing trends in the Automotive LED
supply chain lately. Despite better sales in certain Industrial and
Consumer businesses, the macro-economic sentiment in these markets remains
very challenging. We worked hard to improve our operational cash flow and
will continue to work on improving our profitability”, comments Aldo
Kamper.
Third Quarter Outlook
With a strengthening demand for its Automotive products, the Group expects
third quarter revenues to improve to a level of EUR 840 – 940 million. The
adjusted EBIT is expected to come in at 5% to 8%.
FY2024 comments
The Group will have a lower revenue base in 2024 after exiting non-Core
semiconductor businesses. From this new base, including the Lamps &
Systems segment, it expects revenues to outgrow its target markets,
assuming end-markets stabilize.
The Group also targets slightly positive Free Cash Flow in 2024 with
significantly reduced CAPEX compared to 2023, assuming end-markets
stabilize.
Half-year report and additional information
Additional financial information for the second quarter as well as the
half year report for the first half 2023 is available on the company
[1]website. The second quarter 2023 investor presentation incl. detailed
information on the strategic update of the group 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, 28 July 2023. The
press call will take place at 10.00am CEST. Journalists who would like to
join the press call can register [3]here. The conference call for analysts
and investors will start at 11.00am CEST and can be joined via [4]webcast.
###
About ams OSRAM
The ams OSRAM Group (SIX: AMS) is a global leader in optical
semiconductors. 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,
healthcare and select consumer sectors 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 21,000 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 over EUR 4.8 billion revenues in 2022 and is listed as
ams-OSRAM AG on the SIX Swiss Exchange (ISIN: AT0000A18XM4).
Find out more about us on [5] 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: [6]>Twitter [7]>LinkedIn
[8]>Facebook [9]>YouTube
for further information
Investor Relations Media Relations
ams-OSRAM AG ams-OSRAM AG ams OSRAM AG
Dr Juergen Rebel Amy Flécher Hilary McGuinness
Senior Vice President Vice President Head of Public Relations
Investor Relation Corporate Communications Corporate Communications
T: +49 171 273 8613 T +43 664 8816 2121 T: +49 151 276 70 184
[10]investor@ams-osram.com [11]press@ams-osram.com
[12]press@ams-osram.com
ams-osram.com ams-osram.com ams-osram.com
End of Inside Information
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27-Jul-2023 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: 1690431
End of Announcement EQS News Service
1690431 27-Jul-2023 CET/CEST
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