Active Crisis Management Impacts Osram’s Third Quarter
July 30, 2020
Osram mastered the third fiscal quarter better than expected compared to the main sales markets thanks to decisive countermeasures at a global level. Although revenue on a comparable basis fell by 29.4 percent to 606 million euros within a year due to the impact of the Coronavirus crisis, EBITDA before special items was well above expectations with negative 27 million euros. While the Automotive (AM) business unit was, as expected, hit hardest by the slump in sales, Opto Semiconductors (OS) developed relatively positively. Company-wide free cash flow was only minus 7 million euros due to effective management of the working capital. “The success of our Covid-19 measures and our liquidity management are clearly reflected in our quarterly figures. In the third quarter, we already achieved the overall savings that we had forecasted for the whole year,” said Olaf Berlien, CEO of OSRAM Licht AG. “Our business performance shows that we were well prepared for the crisis. In particular, our development in North America and China makes us confident that we will achieve our current forecast for the year despite all adversities”.
In the third quarter, the Coronavirus crisis unsurprisingly left its deepest traces in the AM business unit. AM revenues fell by 35.7 percent year-on-year to 282 million euros. The continued weak development of margins in the Osram Continental joint venture also made a decisive contribution to this decrease. In addition, an impairment loss of 48 million euros had to be recorded there.
Adjusted EBITDA for the entire AM business unit was minus 23 million euros. Meanwhile, the cash outflow was limited to 19 million euros. The decline in the OS business unit was significantly less severe. OS revenue decreased by 19 percent to 297 million euros. Adjusted EBITDA was 36 million euros. The operating margin remained in the double-digit range at 12.2 percent. Free cash flow was again positive at 24 million euros. The Digital (DI) business unit was in some areas significantly affected by revenue declines, for example in cinema lamps and stage lighting. Consequently, revenues decrease by around 31 percent to 159 million euros. Adjusted EBITDA was minus 23 million euros. In contrast, free cash flow was clearly positive at 17 million euros.
The global contingency plan, as well as the local hygiene and operating concepts for preventing Coronavirus, have proven their effectiveness at Osram. Thanks to a bundle of measures in and around the workplace, there were very few infections among the approximately 22,000 employees, and the restrictions in production remained limited.
Nevertheless, the current final quarter of the 2020 financial year will continue to be economically influenced by the pandemic. However, Osram is showing visible signs of recovery, particularly in Asia. The production sites in these regions are producing almost as much as before the crisis began. But the economic recovery in Europe has not fully occurred. Overall, the Management Board sees itself well on track to meet the annual forecast adjusted in June.
Changes in the Supervisory Board
Osram Supervisory Board members Roland Busch, Frank H. Lakerveld and Arunjai Mittal resigned from their mandates on Tuesday evening. They are followed by the independent management consultant Hans-Peter Metzler, ams board member Thomas Stockmeier and ams works council member Johann Christian Eitner. “I would like to thank Mr. Busch, Mr. Lakerfeld and Mr. Mittal for their support over the recent few years and look forward to a beneficial working relationship with their three successors who have been appointed to the Supervisory Board by our majority shareholder ams,” explained Olaf Berlien, CEO of Osram.
