05.01.24
ams OSRAM delivered solid Q1 revenues of €847 million, adjusted EBIT margin of 5.2%, restructured microLED development, works on exiting 8-inch factory SLB,and is on track for positive FCF (after interest) in 2025.
“The industry dynamics in our LED markets have changed with cancellation of the microLED cornerstone project,” said Aldo Kamper, CEO of ams OSRAM. “We adjust our strategy accordingly and continue to strengthen investments in the soon biggest LED market segment – automotive – which is to grow structurally for years to come.
“We intend to step out of the 8-inch factory and focus our microLED development on automotive needs for accelerating our path towards delivering truly positive free cash flow in 2025,” added Kamper. “We showed year-on-year growth in Q1 on a like-for-like basis in a difficult environment driven by structural growth in automotive and some cyclical recovery. The promising mid-term growth prospects of all our core businesses that we are focusing on in automotive, industrial, medical, as well as selected consumer applications, are intact.”
On a like for like basis (without portfolio or currency effects), revenues improved by around 5% year-on-year compared to the clean base of €817 million in Q1/23. The main drivers for this year-on-year increase are the automotive and consumer semiconductor businesses, whilst industrial business remains weaker than a year ago.
The adjusted EBIT (adjusted earnings before interest and taxes, i.e. operating margin adjusted for special, non-operational effects) margin came in slightly below the midpoint of the guided range of 4% - 7%, namely at 5.2%.
On Feb. 28, 2024, ams OSRAM announced that a lead customer had stopped the cornerstone microLED development project. The company initiated restructuring its microLED related development activities in both Malaysia and Germany to a remaining minimum core development for mainly proprietary use in future automotive products, such as advanced, high-pixelated forward lighting solutions. In total, more than 500 employees at the respective sites combined are affected.
This new view of the market also suggests that the superior features of advanced, high-performance microLED based displays will primarily play a role in several smaller applications that also will scale slower and later than expected previously.
In case a new lead customer commits in a timely manner to fund dedicated developments for specific applications, the company may continue a more substantial microLED development in an essentially cash flow and EBIT neutral manner.
The stop of the cornerstone project will incur one-time cost of around €700 million, at the lower end of the previously indicated range of €600 to €900 million.
The company is also pursuing to exit the Sale-and-Lease-Back (SLB) contract for its state-of-the-art Kulim-8-inch factory to a new lessee with high priority. The intended exit is being pursued in close alignment with the SLB investors. With this step the company intends to reduce its long-term debt by around €400 million.
“The industry dynamics in our LED markets have changed with cancellation of the microLED cornerstone project,” said Aldo Kamper, CEO of ams OSRAM. “We adjust our strategy accordingly and continue to strengthen investments in the soon biggest LED market segment – automotive – which is to grow structurally for years to come.
“We intend to step out of the 8-inch factory and focus our microLED development on automotive needs for accelerating our path towards delivering truly positive free cash flow in 2025,” added Kamper. “We showed year-on-year growth in Q1 on a like-for-like basis in a difficult environment driven by structural growth in automotive and some cyclical recovery. The promising mid-term growth prospects of all our core businesses that we are focusing on in automotive, industrial, medical, as well as selected consumer applications, are intact.”
On a like for like basis (without portfolio or currency effects), revenues improved by around 5% year-on-year compared to the clean base of €817 million in Q1/23. The main drivers for this year-on-year increase are the automotive and consumer semiconductor businesses, whilst industrial business remains weaker than a year ago.
The adjusted EBIT (adjusted earnings before interest and taxes, i.e. operating margin adjusted for special, non-operational effects) margin came in slightly below the midpoint of the guided range of 4% - 7%, namely at 5.2%.
On Feb. 28, 2024, ams OSRAM announced that a lead customer had stopped the cornerstone microLED development project. The company initiated restructuring its microLED related development activities in both Malaysia and Germany to a remaining minimum core development for mainly proprietary use in future automotive products, such as advanced, high-pixelated forward lighting solutions. In total, more than 500 employees at the respective sites combined are affected.
This new view of the market also suggests that the superior features of advanced, high-performance microLED based displays will primarily play a role in several smaller applications that also will scale slower and later than expected previously.
In case a new lead customer commits in a timely manner to fund dedicated developments for specific applications, the company may continue a more substantial microLED development in an essentially cash flow and EBIT neutral manner.
The stop of the cornerstone project will incur one-time cost of around €700 million, at the lower end of the previously indicated range of €600 to €900 million.
The company is also pursuing to exit the Sale-and-Lease-Back (SLB) contract for its state-of-the-art Kulim-8-inch factory to a new lessee with high priority. The intended exit is being pursued in close alignment with the SLB investors. With this step the company intends to reduce its long-term debt by around €400 million.