Tuesday, 06. November 2018
With a solid final quarter, Osram is polishing the record of a battered fiscal year with two forecast cuts. The shareholders should not suffer from this. Hopes the company relies on a conversion.
The lighting group Osram surprises with good quarterly figures and a small feel-good program for shareholders. Sales were higher than expected and the bottom line was smaller than feared. In addition, the company announces a large share buyback and is promising a stable dividend. By contrast, growth prospects are rather subdued. Above all, the margin remains under pressure. "The trend is likely to be more successful in the second half of the financial year than in the first half," the group said.
In the final quarter between July and the end of September, revenues totaled 1.06 billion euros – an increase of three percent compared to the previous year. Analysts had expected lower revenues. Although adjusted operating income (Ebitda) fell by 8 percent to 147 million euros, analysts had expected much less with 128 million euros. After taxes stood a loss of five million euros, after a profit of 40 million a year before. But experts had estimated the loss five times as high.
At the end of the financial year, income from continuing operations thus amounted to 4.1 billion euros, which was slightly below the previous year's level. Meanwhile, the Ebitda fell by almost a quarter to 477 million euros. The margin was also lower. The surplus melted by almost half to 142 million euros. Osram had already lowered its forecast at the end of June due to restrained demand from the automotive industry, weak business in the lighting sector and project delays in the smartphone sector. It was the second time in the financial year. In total, the former Siemens division employed 27,400 people.
Osram realigns itself
Osram announced that it would buy back its own shares with a volume of up to 400 million euros and that it would withdraw the shares it had already acquired. In addition, an unchanged dividend of € 1.11 for the past financial year should be paid, significantly more than expected.
In the future, the Group intends to focus even more on photonics and optical technologies beyond lighting. In corporate terms, this means sharpening the alignment. The Management Board has accordingly decided to reorganize its business areas, which now focus on optical semiconductors, automotive and digital applications. With this focused line-up, Osram wants to get closer to its markets and better balance its portfolio.
The Group is adopting a new structure: The automotive sector is to supply the automotive industry in the original equipment and aftermarket business, the digital division should include intelligent digital light management systems and cloud and IoT solutions. The sales processes for the lighting business (Siteco) and the US service business are meanwhile progressing well. The Opto Semiconductors segment remains the technological backbone of Osram.
For 2019 Osram announced a stable to moderately growing sales development (0 to 3 percent) to expect on a comparable basis. Adjusted for one-off effects, the Ebitda margin should be between 12 and 14 percent, after 14.7 percent in the past year. In addition, a positive free cash flow in the mid-double-digit million euro range is expected. This forecast refers to the previous consolidated statement in the three reporting areas from the past fiscal year without portfolio effects, such as the targeted sale of the lighting and US service business and the effects of the reorganization.