ams OSRAM Sharpens Portfolio Towards Profitability, Structural Growth

ams OSRAM presented a strategic re-alignment of the group while reporting second quarter financial results in line with the company’s expectation range.

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 €300 million 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.

“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,” said Aldo Kamper, CEO ams OSRAM.

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.

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 €150 million by the end of 2025, approximately half of which is targeted to be realized by the end of 2024.

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 reports second quarter revenues of €851 million and adjusted operating margin of 5.9% in line with its guidance. Excluding deconsolidation effects of €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.

The Semiconductor segment, representing 71% of Q2 revenues, or €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.

The Lamps & Systems segment, representing 29% of Q2 revenues, or €251 million, recorded robust revenues in spite of the typical seasonal decline in the Automotive aftermarket lamps business.

“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,” said Kamper.