Osram held its ground in a difficult market environment in the third
quarter of its 2018 fiscal year. On a comparable basis, revenue remained
consistent with the prior year’s level of €1.02 billion. At €133
million, EBITDA adjusted for special items was significantly below the
prior year’s level. The adjusted EBITDA margin reached 13.1 percent.
Foreign exchange effects as well as higher expenses for R&D and ramp-up
costs burdened the adjusted EBITDA in Q3 with more than €40 million. In
the first nine months of the current fiscal year, that impact came to
more than €130 million, with €75 million due solely to foreign exchange
rate fluctuations. Recently, global changes in the ordering behavior of
our customers and distributors, due in part to existing and imminent
trade restrictions, have weighed on the company’s revenue. The change in
market dynamics due to the transition from allocation to normalization
for some semiconductor products also have taken a toll on revenue. These
effects are expected to have an impact in the coming months and led the
Managing Board to adjust the annual forecast at the end of June. In this
context, the Managing Board has decided to further sharpen the portfolio
and as a first step, the company will divest its luminaires business.
Management is looking at a number of measures to rectify the current
market situation. They are first looking to streamline the global
administration, which should reduce cost by approximately 20 percent.
Beyond that, several structural and operational programs have been
implemented. This includes the improvement of efficiency in R&D, in the
supply chain, and in the German factory alliance. These operational
programs should result in €130 to €140 million in savings by 2020.
Negotiations with employee representatives about a reconciliation of
interests were considerably expedited and have concluded. Charges for
this reconciliation have been taken into account in the forecast for the
current fiscal year.
In the third quarter of the fiscal year, the general economic slowdown
and weak demand in the automotive industry was primarily reflected in
our Opto Semiconductors (OS) and in the Specialty Lighting (SP)
segments. The U.S. trade tariffs, more stringent European emission tests
and lower production expectations from premium manufacturers also caused
uncertainty. In addition, there were project delays with mobile devices
and horticulture applications and a continued slowdown of the general
lighting market.
The strategic revision of the Lighting Solutions (LS) business unit
announced at the beginning of the year has been completed. In addition
to the ongoing sale of the LS service business, the Managing Board is
now planning to sell the luminaires business. The luminaires business as
part of the reporting segment Lighting Solutions and Systems (LSS) is
now on the right track due to numerous efficiency improvements.
Outlook for the current fiscal year
Osram adjusted its outlook for the current fiscal year at the end of
June. Based on these changes, the Managing Board now expects a
comparable revenue increase of 1.0 to 3.0 percent (previously: 3.0 to
5.0 percent) and adjusted EBITDA of €570 to €600 million (previously:
approximately €640 million) for fiscal year 2018. In addition, earnings
per share (diluted) of €1.00 to €1.20 (previously: EUR 1.90 to 2.10) are
forecast for fiscal year 2018. This includes the expense already
communicated in connection with the “OSRAM future concept.” Negative
free cash flow at €150 to €200 million (previously: negative free cash
flow €50 to €150 million) is now expected.
As previously announced, the Managing Board is currently revising the
strategic development plan, and the results will be announced at a
capital market conference on Nov. 7, 2018.
Osram’s long-term growth prospects remain good. LED and laser-based
technologies are aligned with global megatrends and continue to serve
growing high-tech markets. The group is actively shaping the ongoing
technological shift and has recently expanded its portfolio with
innovative future technologies. That includes the acquisition of US
provider Vixar, which specializes in compact 3D identification
technology, and the acquisition of the horticulture company Fluence. The
closings of both acquisitions were completed in the beginning of FQ4, as
was the takeover of the former Trilux subsidiary BAG electronics. The
Osram Continental joint venture, which will shape the future of
intelligent car lighting, went into operation at the beginning of July.
The company held a conference call for analysts at 1:00 p.m. CEST. A
recording of the conference call can be found online at http://services.choruscall.eu/links/osram180801ir.html
Selected key figures for the Osram Light Group in the third quarter
2018
2017
(1adjusted for special items, e.g. transformation
costs, significant legal and regulatory matters, and M&A-related
costs.)
Performance of the reporting segments in the third quarter
2018
2017
(nominal)
(Provisional, unaudited figures. Items stated in € million, margin
in %, 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 2017 (September 30), OSRAM had approximately
26,400 employees worldwide. It generated revenue of more than €4.1
billion in fiscal year 2017. 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180801005572/en/