ams OSRAM Delivers Solid Q3 2024 Revenues

ams OSRAM reported its third quarter 2024 results, delivering solid €881 million Q3 revenues, 19% adjusted EBITDA margin supported by NRE, and upsizing its strategic efficiency program “Re-establish the Base” by €75 million run-rate savings.

“We are progressing faster with implementing our strategic efficiency program ‘Re-establish the Base’ as planned,” said Aldo Kamper, CEO of ams OSRAM. “Given that cyclical weakness in key markets persists, further cost savings are required to sustain our trajectory towards industry benchmarks while continuing our investment to exploit structural growth paths in our semiconductor target markets. Therefore, we are stepping up our ‘Re-establish the Base’ program by another €75 million run-rate savings to be realized by the end of 2026.”

ams OSRAM announced revenues of €881 million for the third quarter 2024, at the midpoint of the guided range of €830 – 930 million. Revenues increased 8% quarter-over-quarter, primarily driven by the ramp of new semiconductor products for consumer handheld applications, the seasonal high of LED products for horticulture and NREs (including catch-up) for development of novel LED technologies, while the product mix showed seasonal and cyclical shifts overall.

Year-over-year, the group records a slight revenue decline of 3% which is entirely attributable to the segment Lamps & Systems. The semiconductor business came in flat year-over-year with €647 million revenues in Q3, compared to €648 million a year ago.

The adjusted EBITDA (adjusted earnings before interest, taxes, depreciation, and amortization, i.e. operating margin adjusted for special, non-operational effects) came in at €166 million, i.e. at 18.8% adjusted EBITDA margin, above the midpoint of the guided range of 17% – 20%.

The adjusted EBIT (adjusted earnings before interest and taxes, i.e. operating margin adjusted for special, non-operational effects) margin for the group came in at 9.3%. In absolute terms, the adjusted EBIT amounted to €82 million.

On July 27, 2023, the company announced its strategic efficiency program “Re-establish the Base”, which was aimed at focusing the company on its profitable, structurally growing core. It targets €75 million run-rate savings by end of FY2024 and €150 million run-rate savings by end of FY2025 compared to 2023 actuals.

To date, the company has realized already €85 million savings, reaching the €75 million run-rate savings mark earlier than anticipated. Recent implementation successes are especially evident when looking at the profitability improvement of the CSA segment.

At the start of the program in 2023, the company’s non-core semiconductor portfolio represented approx. €300 – 400 million. In FY2024, close to €200 million of those are still part of the group revenues.

The company is exiting this remaining, loss-making, non-core business through product end-of-life, which will be largely completed by the end of 2024, after it had sold the passive optical components assets and restructured its CMOS image sensors business earlier this year. Several sizeable new design-wins in consumer device applications are expected to compensate for the revenue loss from those product discontinuations.

In view of the persisting market uncertainties in 2025, especially when it comes to the automotive sector, the company has decided to up-size and extend its strategic efficiency program by around €75 million run-rate savings to be effective by the end of 2026. The program extension will affect additionally more than 500 non-production employees.

With largely completing the exit of the non-core semiconductor portfolio by end of 2024, the company sharpens its focus on structural growth in its semiconductor core markets. Based on this year’s semiconductor core revenues (which are defined excluding approximatel €200 million of non-core business which is being exited), the company intends to grow its semiconductor business with a CAGR between 6% and 10% until end of 2027. The traditional lamps business is expected to develop in a corridor of flat or slightly down.