Osram Looks Back on Successful Fiscal Year

In the fiscal year ended Sept. 30, 2016, Osram benefited from continuing strong demand, particularly for its premium opto semiconductor products. On a comparable basis, i.e. adjusted for portfolio and currency effects, revenue from continuing operations rose about 6% year on year and reached €3.78 billion. All reporting segments contributed to this increase. On a nominal basis, revenue grew by 6%.
 
Adjusted for special items, EBITA from continuing operations increased approximately 10% to €471 million, translating into a margin of 12.5%. As a result of the book gain from the sale of the Felco shares, net income from continuing operations more than doubled to €532 million. A dividend of €1.00 per share is to be proposed to the Annual General Meeting. Going forward, For fiscal year 2017, the company expects comparable revenue growth of 5% to 7% and an adjusted EBITDA margin of at least 16%.
 
“Our fiscal year 2016 was extraordinarily successful. We achieved another record year and met our forecasts while implementing the biggest reorganization in Osram’s history. This was an outstanding achievement. Today, Osram is a high-tech company with almost 17,000 patents and leading positions in its markets. We want to expand this position and attack in areas where we are not yet number one,” said Olaf Berlien, CEO of OSRAM Licht AG.
 
As announced, the fourth quarter of fiscal 2016 was strongly influenced by the fact that deliveries had been brought forward in the preceding quarter in view of the separation of the IT systems of Osram and the general lighting lamps business. Against this background, revenue from continuing operations was €909 million, which is a decline of 0.6% on a comparable basis from a year earlier. On a nominal basis, revenue was down around 3%. The adjusted EBITA margin decreased by more than 3%points to 8.9%. A large part of the deliveries brought forward in the third quarter was related to high-margin products. Net income from continuing operations was €44 million in the fourth quarter.
 
Opto Semiconductors (OS) continued to benefit from strong demand for its premium products in the fourth quarter, particularly in the area of infrared. Revenue rose around 9% on a comparable basis. With 18.4%, the EBITA margin again reached a good level and included expenses relating to the signing of a license agreement. Construction of the new LED chip factory in Kulim, Malaysia, is still progressing according to plan.
 
In the fourth quarter, the above-mentioned pull-forward effects had an impact on the Specialty Lighting (SP) reporting segment, which includes the Automotive Lighting and Professional & Industrial Applications units. The segment’s comparable revenue declined about 2% year on year, despite continued robust demand from the automotive industry. The adjusted EBITA margin reached 8.6%.
 
The Lighting Solutions & Systems (LSS) reporting segment, which comprises the luminaires and systems business, also felt the impact from the pull-forward effects in the fourth quarter, with comparable revenue falling around 4%. Apart from that, demand particularly for indoor lights and LED drivers remained favorable. The adjusted EBITA margin reached break-even. Osram is currently converting several BMW plants in Germany and Austria to modern and energy-saving LED technology. This is one of the biggest orders to date in the Lighting Solutions business unit.
 
For fiscal year 2017, the managing board expects comparable revenue growth of 5% to 7%. The adjusted EBITDA margin is anticipated to be at least 16% and will be affected, among other factors, by rising investments on a group level for research and development in the context of the Diamond initiative. Free cash flow is targeted to be around zero. The managing board is confident about Osram’s positive medium-term prospects and is therefore aiming for a dividend of at least €1.00 per share also for fiscal 2017.