Osram Systematically Tackling Its Realignment

Osram is systematically tackling its realignment, as the supervisory board of OSRAM Licht AG gave the green light for a mandate to examine the carve-out of the general lighting lamps business.
 
As an independent entity, the business could operate more freely on the market and realize strategic options. The businesses with opto semiconductors, automotive and specialty lighting as well as luminaires, lighting systems and solutions would as a result form the future core business of Osram.
 
With this move, the company will increase its focus on growth, innovation and technology leadership and addresses the different dynamics and requirements in the changing lighting market. The upheaval in the industry also had an impact on Osram’s performance in the second quarter of fiscal 2015.
 
Revenue on a comparable basis, i.e. adjusted by portfolio and currency effects, fell about 2% from the year-earlier period, in particular due to significant declines in the traditional lamps and components business. In contrast, revenue increased more than nine% on a nominal basis to almost €1.4 billon due to the weakness of the euro against key currencies and the acquisition of Clay Paky.
 
EBITA excluding special items rose about 30% to €151 million, translating into a margin of 10.8%. The earnings development was driven by a strong operating performance as well as cost savings from the ongoing transformation program and positive currency effects.
 
Against this background, Osram confirms the recently updated outlook for fiscal 2015.
 
“While we performed well again in the second quarter, we have to face the realities of the market,” said Olaf Berlien, CEO of OSRAM Licht AG. “The lighting market is basically characterized by two business models with different dynamics and requirements. On the one hand, you have the volume markets in which consistently high quality and cost efficiency are crucial competitive factors. On the other hand, there are the technology markets. These are characterized by innovation, tailor-made solutions and sustainable growth. These technology markets are intended to be Osram’s future core business.”
 
The revenue share of LED-based products and solutions reached 41% in the second quarter. EBITA on a reported basis rose 54% to €125 million, or 8.9% of revenue. With €78 million, net income was 13% above the year-earlier figure.
 
In the second quarter, the Opto Semiconductors reporting segment recorded comparable revenue growth of 8% from a year earlier. Again, all reporting regions contributed to this development. Growth was driven by the automotive, industrial and infrared business. At 17.0%, the EBITA margin continued to be on a high level.
 
Specialty Lighting (SP), with its Automotive Lighting and Display/Optics units, recorded continued growth coupled with high profitability in the second quarter. Revenue was up 5% on a comparable basis, also driven by all reporting regions. Excluding special items, the adjusted EBITA margin reached 15.9% and benefited from positive currency effects, among other things.
 
The LED Lamps & Systems (LLS) reporting segment covers Osram’s business with LED lamps, light engines as well as LED drivers. Thanks to the continued demand for LED products, the segment posted comparable revenue growth of 43% in the second quarter. Compared with the year-earlier period, the adjusted EBITA margin improved by 7.6% to minus 5.9% despite negative currency effects.
 
In the Classic Lamps & Ballasts (CLB) reporting segment, revenue on a comparable basis declined 16% from a year earlier after a strong first quarter. At the same time, the adjusted EBITA margin showed a very good performance in the second quarter and rose to 10.7%, benefiting from cost savings.
 
The Luminaires & Solutions (LS) reporting segment comprises luminaires for professional customers as well as the service and solutions business. Due to the regional focus strategy and product portfolio adjustments, the segment posted a comparable revenue decline of eight% in the second quarter. The adjusted EBITA margin improved substantially by 9.7% and was minus 15.0%.
 
Osram confirms the recently updated outlook for fiscal 2015. The Managing Board thus expects revenues to be on the level of fiscal 2014 on a comparable basis. The adjusted EBITA margin is expected to be above 9.0%.