ams OSRAM Reports Solid 3Q Revenues

Premstaetten, Austria and Munich, Germany — ams OSRAM (SIX: AMS), a global leader in optical solutions, reports third-quarter group financial results. “We recorded solid results including sequential revenue growth for the third quarter as our business performed fully in line with our previous guidance. We continue to see a demanding market situation in several end markets in an environment of slowing macroeconomic momentum globally. Despite these unfavorable trends our automotive, industrial, and medical businesses offered a solid performance in the quarter while our consumer business provided good contributions to group results. Looking forward, we are excited that, supported by excellent customer engagement, our strategic development and industrialization program for a leading smallest structure size microLED technology and the construction of our industry-first 8” LED front-end fab are advancing as planned,” commented Alexander Everke, CEO of ams OSRAM.

“Beyond this highly prioritized strategic program and investment we see ongoing positive customer traction and engagement in target markets and applications. Irrespective of the current demanding industry situation, design activities and successes across our customer base continue to support our pipeline for the mid to longer term. Customers are highly interested in harnessing the advantages and richness of our portfolio as they implement their roadmaps for future products in automotive, consumer, industrial and medical. In this context, I am glad to confirm a substantial pre-payment agreement for future deliveries which underpins an existing engagement. This is a testament to our highly attractive offering in innovative technologies,” Everke added.

“We have reached the mid-point of the planned synergy creation period and I am glad to confirm that we have created 70% – or EUR 245 million – of the total expected synergies and savings so far which are fully in line with our plans. We are equally successful in advancing our integration programs as planned and they remain a key priority as we move towards completing the integration. We are also in the final phase of the planned disposals and expect total proceeds from the disposals of more than EUR 550 million. We now look forward to closing the last two already signed transactions, one of which is expected to close this quarter, as well as completing the last smaller-scale disposal. All in all, we continue to realize our targets related to the acquisition and integration of OSRAM Licht AG (OSRAM).

“We are seeing previously mentioned inventory adjustments in end market supply chains, particularly in the automotive sector. Imbalances continue to impact several end markets including effects from lower automotive production and smartphone shipments globally. These trends create a demanding market and supply chain situation in an environment of increasingly unfavorable macro-economic momentum. Against this backdrop our revenues showed a solid development and sequential growth in the quarter. At the same time, the current market situation drove the previously mentioned decreased production volumes which impacted gross margin in line with expectations.

“As announced we are implementing additional cost mitigation measures to manage through the current and expected short-term market situation. These group-wide measures aim at diverse areas of our business and offer an expected cost mitigation volume of around EUR 100 million. In addition, we have revisited investment plans for 2022 in light of the market situation and now expect total capital expenditures for 2022 at a lower level of EUR 600 million.

“In view of financial markets developments, particularly with respect to increased interest rates and the related increased applicable cost of capital, as well as on-going macro-economic developments, we have recently conducted an impairment testing of assets in line with IFRS requirements and have recorded a one-off non-cash impairment charge, including the restructuring of certain production capacities, of EUR 335 million in the IFRS based (unadjusted) results for the quarter.

“Significant changes in the macro-economic and industry environment over the course of this year include heightened uncertainty regarding the economic outlook as well as widespread and meaningful inflationary pressures driven by geopolitical developments. We are taking a cautious view given this demanding outlook for our markets and ongoing and expected cost inflation for our business and our customers, which is likely to impact mid-term volumes and technology adoption in certain markets such as horticulture, outdoor lighting or certain Android and non-smartphone consumer applications, resulting in less favorable product mix assumptions. We therefore update our mid-term financial targets and expect revenues of EUR 4.7 billion +/-300 million (previously EUR 4.9 billion +/-300 million) and an adjusted EBIT margin of 13% +/-100 basis points (previously 15% or better) for full year 2024. The expected timeline for the industrialization and the volume production availability of our leading microLED technology is not changed by these updated assumptions. Moreover, the long-term financial target model for the group, which is fully supported by our long-term strategy for leadership in optical solutions, remains unchanged.

“Our strategy is built around innovative applications across end markets that offer significant mid- and long-term growth opportunities. Accordingly, we will move forward by continuing to streamline our portfolio in full alignment with this strategy. Taking the demanding macro-economic and industry environment into account, we will continue meaningful R&D investments with a clearly defined focus on driving technology and product innovation in optical technologies,” Everke concluded.

Quarterly financial summary

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