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ams OSRAM delivers solid results in demanding supply chain and more volatile market environment with second quarter revenues and operating profitability (adj.) fully in line with expectations

2022-08-04 05: 57

Ad hoc Announcement pursuant to Art. 53 Listing Rules of SIX Swiss Exchange

 

  • Second quarter revenues of EUR 1.18 billion and adjusted EBIT margin of 8.8% fully match with expectation range
  • Nearing completion of portfolio re-alignment with disposals of Digital Systems Europe/Asia and architectural lighting business announced and closing of disposal of automotive lighting systems business, on track to complete remaining planned disposal
  • Robust customer engagement for future capabilities from 8” advanced LED and microLED manufacturing investment
  • Planned retirement of approx. EUR 350 million of gross debt in the third quarter
  • Third quarter expected revenues of EUR 1,150-1,250 million (EUR 1,190-1,290 million on a comparable portfolio basis) and expected adjusted EBIT margin of 6-9% reflect an expected solid revenue development in an increasingly unfavorable end market and macro-economic environment impacting group production volumes and industry inventory levels
     
Premstaetten, Austria and Munich, Germany (29 July 2022) -- ams OSRAM (SIX: AMS), a global leader in optical solutions, reports second quarter and first half group financial results. “Our business showed a solid performance in the second quarter where we delivered results fully in line with our previous guidance. We see supply chain and end market imbalances being enhanced by increasingly unfavorable macro-economic trends. Nevertheless, our automotive and industrial & medical businesses offered solid results in the quarter while our consumer business contributed attractively to group results,” said Alexander Everke, CEO of ams OSRAM, commenting on the second quarter.
 
“We see strong customer traction and support for innovation roadmaps we are implementing as a leader in optical technologies. I am particularly excited about our robust customer engagement around the cutting edge capabilities created by our investment in industry-leading 8” manufacturing capacity for applications in LED and microLED,” Everke added.
 
“Our focus on the integration of ams OSRAM continues to be a priority with our initiatives for integration and synergy creation progressing as planned. In the quarter, we announced the disposals of the architectural lighting business Traxon as well as the Digital Systems Europe/Asia business for LED power supplies and related systems which is the last major planned disposal. In addition, we closed the disposal of the automotive lighting systems business AMLS at the beginning of July, which had been established after the dissolution of the OSRAM Continental joint venture. I am glad to confirm that we are nearing the completion of our portfolio re-alignment with only one smaller-scale disposal outstanding,” Everke added.
 
“Ongoing imbalances in semiconductor and other supply chains have continued to impact volumes in several of our end markets, amplified by lockdown-related effects in Asia. In light of this situation we realized a solid operational performance in the quarter. These imbalances continue and we have started to see a softening of forward demand trends in the automotive sector leading to order push-outs for the second half. We believe these reflect increasingly unfavorable global macro-economic developments and related challenges including expected inventory adjustments in the global automotive value chain.
 
Our portfolio of optical technologies offers exciting opportunities for mid- and long-term profitable growth across our end markets. We are strongly engaged in comprehensively focusing and streamlining our portfolio in line with these goals. We will continue highly dedicated R&D investments into our portfolio and defined growth drivers to create long-term value in optical solutions,” Everke concluded.
 
Quarterly financial summary
 
EUR millions
(except per share data)
Q2 2022
Q1 2022
QoQ
Q2 2021*
YoY
Revenues
1,183
1,246
-5%
1,239
-5%
Gross margin adj.1)
31.6%
33.1%
-150 bps
33.5%
-190 bps
Operating income adj.1)
104
126
-18%
109
-5%
Operating margin adj.1)
8.8%
10.1%
-130 bps
8.8%
+0 bps
Net result adj.1)
-54
102
-153%
70
-178%
Diluted EPS adj.1)
-0.21
0.39
 
0.26
 
Diluted EPS adj. (in CHF)1)2)
-0.21
0.40
 
0.29
 
Operating Cash Flow
100
147
-32%
190
-48%
Net debt
1,727
1,853
-7%
1,908
-9%
 
1)  Excluding M&A-related, transformation and share-based compensation costs as well as results from investments in associates and sale of a business  
2)  Earnings per share in CHF were converted using the average currency exchange rate for the respective periods
* 2021 financials reflect reclassification within functional cost categories
Note: EPS denotes earnings per share
 
Second quarter group revenues were EUR 1,183 million, down 5% sequentially compared to the first quarter 2022 and down 5% compared to same quarter 2021, influenced by deconsolidation effects. Adjusted[1] group gross margin for the second quarter 2022 was 32%, down from 33% for the first quarter as well as for the same quarter 2021. First half group revenues were EUR 2,429 million, compared to EUR 2,521 for the same period 2021. Adjusted1 group gross margin for the first half 2022 was 32% compared to 34% for the same period 2021.
 
The second quarter adjusted1 group result from operations (EBIT) was EUR 104 million or 9% of revenues compared to EUR 126 million or 10% for the first quarter and EUR 109 million or 9% of revenues for the same period 2021 (unadjusted: EUR 216 million or 18% of revenues for the second quarter reflecting a substantial one-time effect from a disposal). The adjusted1 group result from operations (EBIT) for the first half was EUR 230 million or 9% of revenues compared to EUR 251 million or 10% for the same period 2021.
 
Second quarter adjusted1 group net result was EUR -54 million due to one-time effects compared to EUR 102 million for the first quarter and compared to EUR 70 million for the same quarter 2021 (unadjusted: EUR 58 million for the second quarter). Second quarter adjusted1 diluted earnings per share[2] were EUR -0.21 or CHF -0.21 (EUR 0.22 or CHF 0.22 unadjusted). First half adjusted1 group net result was EUR 48 million compared to EUR 144 million for the same period 2021. First half adjusted1 diluted earnings per share[3] were EUR 0.18 or CHF 0.18 (EUR 0.28 or CHF 0.29 unadjusted).
 
Second quarter group operating cash flow was EUR 100 million while group free cash flow was positive with EUR 3 million. First half group operating cash flow was EUR 247 million with a free cash flow of EUR 37 million. Group net debt was EUR 1,727 million on 30 June 2022, translating into a group leverage of 1.9x net debt/adjusted1 EBITDA. Through the scheduled repayment of the September 2022 USD convertible bond and a promissory note (Schuldscheindarlehen) in the third quarter ams OSRAM expects its gross debt position to be approx. EUR 350 million lower by the end of the third quarter. Cash and cash equivalents stood at EUR 1,413 million on 30 June 2022.
 
The group’s Semiconductors segment again offered the largest contribution to group results providing 68% of revenues in the second quarter.
 
The segment’s automotive business delivered good results in a demanding market environment where end-to-end supply imbalances continued to result in reduced production volumes. This constrained industry situation was additionally impacted by lockdown-related repercussions in Asia during the second quarter. The consumer market area performed solidly and in line with expectations in the second quarter. Lockdown-related impacts in Asia added to seasonal effects and created a less favorable demand situation with lower global smartphone shipments. Against this backdrop ams OSRAM benefitted from the broad presence of its optical sensing solutions across consumer market segments and device classes. The industrial and medical market area continued its attractive contribution to group results in the second quarter. Demand for advanced LED solutions in established and emerging applications as well as for imaging solutions remained robust in important markets. Optical innovation is a cornerstone of ams OSRAM’s strategy for profitable growth. The group’s R&D investments and product roadmaps remain clearly focused on growth opportunities that will drive innovative optical applications for automotive, consumer, industrial and medical markets.
 
The Lamps & Systems (L&S) segment delivered an in-line performance in the second quarter contributing 32% of revenues. The L&S automotive business including legacy traditional lighting tracked expectations in the second quarter taking into account automotive supply chain volatility and imbalances next to stronger seasonal slowdowns in the aftermarket. The other L&S businesses offered solid contributions from their range of industrial, building-related and medical applications in line with respective end demand trends.
 
For the third quarter 2022, ams OSRAM expects group revenues of EUR 1,150-1,250 million (EUR 1,190-1,290 million on a comparable portfolio basis) and an expected adjusted operating (EBIT) margin of 6-9%, based on currently available information and exchange rates.
These expectations include a revenue deconsolidation effect for the third quarter from the closing of the disposal of the AMLS automotive lighting systems business which reduces expected third quarter revenues by around EUR 40 million on a comparable portfolio basis.
 
Expectations for the third quarter reflect a more demanding situation in key end markets and a more unfavorable macro-economic environment including expected inventory adjustments in the industry, amongst others driving overall reduced automotive production volumes and lower total smartphone volumes year-on-year. While expected revenues show a solid development, these end market trends cause decreased production volumes in ams OSRAM’s manufacturing operations in the third quarter, negatively impacting group margins. In light of these macro-economic trends, ams OSRAM is proactively implementing a range of cost mitigation measures while the group manages through the evolving market environment.
 
The expectations for the third quarter also incorporate disposal-related deconsolidation effects compared to the previous year.
 
The Half Year Report 2022 and additional selected financial information for the second quarter and first half 2022 is available on the company website. The second quarter 2022 investor presentation is also available on the company website. ams OSRAM will hold a conference call on the second quarter and first half results on Friday, 29 July 2022 at 10.30am CEST. The conference call will be available via webcast at: https://bit.ly/3nQHLyf.
 
 

GoldMember Report

Report Name Content Format Release
LED Industry Demand and Supply Database Demand Market Forecast: PDF / Excel
1Q (March) /
3Q (September)
2022-2026 Demand Market Forecast
(Backlight and Flash LED / General Lighting / Architectural Lighting / Automotive- Passenger Car & Box Truck & Scooter / Video Wall / Horticultural Lighting / UV LED / IR LED / Micro LED / Mini LED)
Supply Market Analysis:
1. LED Chip Market Value (External Sales, Total Sales)
2. WW New GaN LED and AS/P LED MOCVD Chamber Installation Volume /
    WW Accumulated GaN LED and AS/P LED MOCVD Chamber Installation
3. GaN LED and AS/P LED Wafer Market Demand (By Region / By Wafer Size)
4. GaN LED and AS/P LED Market Sufficiency Analysis
LED Player Revenue and Capacity LED Chip Market Analysis: PDF / Excel
2Q (June) /
4Q (December)
Top 10 LED Chip Manufacturer Revenue and Wafer Capacity
LED Package Market Analysis:
LED Package Manufacturer Revenue, LED Revenue, and Capacity
Top 10 LED Package Revenues in Backlight and Flash LED, Lighting, Automotive, Video Wall, UV LED
LED Industry Price Survey Price Survey- Sapphire / Chip / LED Package (Backlight, Lighting, Automotive, Video Wall, UV LED, IR LED, VCSEL) Excel
1Q (March) /
2Q (June) /
3Q (September) /
4Q (December)
LED Industry Quarterly Update Major Players Quarterly Update: PDF
1Q (March) /
2Q (June) /
3Q (September) / 4Q (December)
EU / U.S- Lumileds, ams OSRAM, CREE LED (Smart Global Holdings)
JP- Nichia, Citizen, Stanley, ROHM
KR- Samsung, Seoul Semiconductor, Seoul Viosys
ML- Dominant
TW- Ennostar, Epileds, Everlight, LITEON, AOT, Harvatek, PlayNitride
CN- San’an, Changelight, HC SemiTek, Aucksun, Focus Lightings, Nationstar, Hongli, Refond, Jufei, MTC, ChangFang Lighting, MLS

 

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Grace Li
E-mail :  Graceli@trendforce.com
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