Osram Continues Growth, Increases Investments in Its Future

Osram reported its first quarter results for 2018. Revenue is up by 5% on the prior-year quarter to $1.03 billion, while adjusted EBITDA margin was 16.7%.
 
“We had a solid first quarter. Despite the significant headwind from currency effects, we managed to generate further growth while maintaining high margins. From the current perspective, we expect to gain momentum in the second half of the fiscal year,” said Olaf Berlien, CEO of OSRAM Licht AG. “The strong and sustained level of demand for our products shows that our expansion of capacity and investment in new technologies was absolutely the right decision because it is enabling us to improve opportunities for long-term growth.”
 
In the first quarter of fiscal year 2018, Osram continued to grow while increasing capital expenditure. Demand for high-tech products, particularly opto semiconductors, remained strong. At €1.03 billion, the group’s revenue on a comparable basis was up by 5% relative to the prior-year quarter. EBITDA adjusted for special items amounted to €172 million, which was nearly the same level as a year earlier. The adjusted EBITDA-margin reached 16.7%. Research and development expenses now equate to 9.4% of revenue. Osram remains on track with the implementation of its growth strategy.
 
To lay the foundation for sustained profitable growth, Osram is continuing to invest in its production and future technologies. Products based on novel LED-related technology already account for two-thirds of actual revenue.
 
To meet the high demand for LEDs, particularly those used in general lighting, Osram opened its new plant in Kulim, Malaysia, in November 2017. Production ramp-up is going according to plan.
 
Looking at global car production, Osram sees a mixed picture. Its view on the automotive market has not changed since Q4, and the company anticipates continued growth, though at a lower level than FY2017. However, the trend of increasing penetration of LED lighting continues, particularly in the automotive industry. LEDs will increasingly replace traditional technologies in new vehicles, supporting our strategy with this business.
 
In fiscal year 2018, Osram will continue to build on its foundations for the future. The company budgets a revenue increase of between 5.5 and 7.5%. The EBITDA adjusted for special items is likely to be approximately €700 million and will be influenced by factors such as currency effects, ramp-up costs for Kulim and increased capital expenditure on research and development, which adds up to a three-digit million Euro amount. For the current fiscal year, Osram expects earnings per share to be between €2.40 and €2.60. Osram is expecting free cash flow between minus €50 million and minus €150 million.