EQS-Adhoc: ams-OSRAM AG: ams OSRAM announces Q3 profitability at upper end of the guidance, revenue above mid-point and re-confirms mid-term target financial model on the back of strong automotive design-wins

EQS-Ad-hoc: ams-OSRAM AG / Key word(s): Quarter Results/Quarterly /
   Interim Statement
   ams-OSRAM AG: ams OSRAM announces Q3 profitability at upper end of the
   guidance, revenue above mid-point and re-confirms mid-term target
   financial model on the back of strong automotive design-wins

   31-Oct-2023 / 07:00 CET/CEST
   Disclosure of an inside information acc. to Article 17 MAR of the
   Regulation (EU) No 596/2014, transmitted by EQS News - a service of EQS
   Group AG.
   The issuer is solely responsible for the content of this announcement.

   ══════════════════════════════════════════════════════════════════════════

   Ad hoc Announcement pursuant to Art. 53 Listing Rules of SIX Swiss
   Exchange
   -------------------------------------------------------

   ams OSRAM announces Q3 profitability at upper end of the guidance, revenue
   above mid-point and re-confirms mid-term target financial model on the
   back of strong automotive design-wins

     • Q3: adj. EBIT margin of 7.9% at upper end of the guidance
     • Q3: revenues of EUR 904 million above midpoint of the guidance
     • Q4: expected fourth quarter revenues of EUR 850 to 950 million with
       adj. EBIT margin of 5-8%
     • Mid-term target financial model reconfirmed with strong design-win
       base in automotive 
     • Rights issue and senior notes placement planned to be executed before
       year end, 2023 – subject to market conditions
     • Revolving Credit Facility of EUR 800 million extended to Sep 2026
     • Sale of company-held treasury shares ended

   Premstaetten, Austria, and Munich, Germany (31 October 2023) -- ams OSRAM
   (SIX: AMS)

   Q3 financial and business update

   ams OSRAM announces revenues of EUR 904 million above the midpoint of the
   guided range of EUR 840 – 940 million, a 6% increase compared to Q2. The
   adjusted EBIT margin came in at 7.9% at the upper end of the guided range
   of 5-8% due to a positive impact from tight cost control measures and some
   positive one-time effects with respect to funding. The company is seeing a
   strong design-win traction in structurally growing markets, especially in
   automotive.

   “We delivered a very solid quarter in a difficult market environment
   especially driven by our strong core business in automotive. Our
   ‘Re-establish the Base’ strategy & efficiency program is on track. The
   execution of our financing plan is also progressing well, and we expect to
   be able to execute the new rights issue and the new bond placement before
   year end - of course subject to market conditions,” said Aldo Kamper, CEO
   of ams OSRAM.

    

   Semiconductor segment update

   The Semiconductor segment represented 72% of Q3 revenues, or
   correspondingly EUR 648 million. End-markets showed a diverse pattern.

   Automotive:

   The automotive semiconductor business performed well during Q3, growing
   revenues 9% quarter-on-quarter and 2% year-on-year. The company saw
   healthy demand across all product groups. In particular, demand from China
   was strong, showing more and more a short-notice order pattern.
   Significant design-win momentum can also be reported. More than EUR 100
   million of life-time value (LTV) of design-wins for the high-pixelated LED
   forward-lighting (EVIYOS^TM) were added and the total number now stands at
   more than EUR 250 million. ams OSRAM’s recently launched intelligent RGB
   products for next generation dynamic interior lighting have also landed
   more than EUR 100 million LTV design-wins, already. Further, the recently
   announced new ALIYOS^TM LED-on-foil technology, which enables
   unprecedented new automotive exterior display and lighting applications,
   has received excellent customer feedback with multiple customers seeking
   to collaborate with ams OSRAM.       

   Industrial & Medical (I&M):

   While semiconductor revenues from I&M end-markets grew by 8%
   quarter-on-quarter, they are still relatively weak compared to a year ago.
   Essentially, all I&M verticals have come under macro-economic pressure.
   Nevertheless, the company did achieve a significant design-win at one of
   its Computer Tomography (CT) equipment customers with a life-time value of
   more than EUR 50 million. 

   Consumer:

   Semiconductor revenues from the consumer end-market, primarily portable
   consumer device applications, mainly smartphones, improved
   quarter-on-quarter by around 6%, mainly in line with typical seasonality.
   Overall, the sales in this end market remain below previous years
   partially due to a weak macro-economic environment.

   The adjusted EBIT of the semiconductor segment improved significantly,
   quarter-on-quarter, specifically from 2% in Q2 to 6% in Q3, or EUR 36
   million. The sequential revenue increase contributed positively to the
   adjusted EBIT. In addition, the recently approved IPCEI funding for the
   company’s development of disruptive LED technologies at its site in
   Regensburg, Germany, helped profitability meaningfully, particularly due
   to a catch-up effect in the recognition of these subsidies.  

    

   Lamps & Systems segment update

   The Lamps & Systems segment represented 28% of Q3 revenues, or
   correspondingly EUR 256 million. In both automotive and industrial &
   entertainment markets, business performed as expected.

   The automotive lamps revenues came in as predicted with aftermarket sales
   contributing significantly. Quarter-on-quarter revenues grew by 6%. 

   The sales in industrial & entertainment applications performed in-line
   with weak end markets and declined by 15% compared to Q2.

   The Lamps & Systems segment recorded an adjusted EBIT margin of 14%. This
   was driven by a healthy product, i.e. strong automotive aftermarket sales,
   with a further, low-single digit million EUR positive impact from one-time
   effects.

    

   Quarterly financial summary

   Adjusted Gross and Operating margins both clearly improved,
   quarter-on-quarter, reflecting the first results from the announced
   efficiency program as well as certain positive one-time effects. The
   average EUR/USD exchange rate stood at 1.09.

   Operating cash flow came in at EUR 199 million in Q3 2023 compared to EUR
   232 million in Q2.

    

    

   EUR millions                   Q3 2023 Q2 2023      QoQ Q3 2022     YoY
   (except per share data)
   Revenues                           904     851       6%   1,213    -25%
   Gross margin adj.^1)             29.0%   27.8% +120 bps   28.7% +30 bps
   Operating income adj.^1)            71      50      43%      91    -22%
   Operating margin adj.^1)          7.9%    5.9% +200 bps    7.5% +40 bps
   Net result adj.^1)                  29      31      -8%      47    -40%
   Diluted EPS adj.^1)               0.11    0.12             0.18        
   Diluted EPS adj. (in CHF)^1)2)    0.10    0.12             0.18        
   Net result (IFRS)                  -55 -1,342*             -370        
   Diluted EPS (IFRS)               -0.21  -5.14*            -1.42        
   Operating Cash Flow                199     232     -14%     151     32%
   Net debt                         2,269   2,034      12%   1,595     42%

   ^1)^  Excluding M&A-related, transformation and share-based compensation
   costs, results from investments in associates and sale of businesses  

   ^2)  Earnings per share in CHF were converted using the average currency
   exchange rate for the respective periods

   * Q2 2023 included impairment charges of EUR ~1.3bn

    

   Status of outstanding OSRAM minority shares

   On September 30^th, 2023, the Group held around 86% of OSRAM Licht AG
   shares, compared to 83% on June 30^th, 2023. The total liability for
   minority shareholders’ put options stood at EUR 616 million at the end of
   Q3/2023 compared to EUR 748 million at the end of Q2/2023. 

   The company has an undrawn Revolving Credit Facility of EUR 800 million in
   place to cover any further significant exercises under the 'domination and
   profit and loss transfer agreement (DPLTA) put option. ams OSRAM’s bank
   consortium prolonged the term for the Revolving Credit Facility by one
   year, to September 2026, subject to the successful execution of the rights
   issue approved by the Extraordinary General Meeting. 

   Progress of Reestablish-the-Base Program

   On July 27^th, 2023, the company announced its ‘Re-establish the Base’
   program, focusing on its profitable core as a new base for sustainable,
   profitable growth. In terms of portfolio measures aimed at exiting certain
   non-core businesses in the semiconductor portfolio, the company has
   prioritized the carve-out of the passive optical components business and
   continues to work towards exit or divestment of the other relevant
   non-core semiconductors businesses. In terms of ‘monetizing innovation’,
   the company has completed the consolidation in the semiconductor segment
   from 3 business units to 2 as of October 1st, 2023, strengthening the
   accountability of the business units for streamlined end-to-end business
   performance.

   In addition, Thomas Stockmeier, formerly CTO, has stepped down from the
   Management Board, effective September 30^th, 2023, reducing the Management
   Board from 4 to 3 members, which will be further reduced to 2 members
   beginning January 1^st, 2024.   

    

   Fourth Quarter Outlook

   Whilst the company sees a strengthening demand for its automotive
   products, industrial markets remain very weak and Consumer markets remain
   modest. As a result, the Group expects fourth quarter revenues to stay
   relatively flat (at the midpoint) in a range of EUR 850 – 950 million. The
   adjusted EBIT is expected to come in at 5% to 8%. The EUR/USD exchange
   rate is assumed at 1.10.

   Comments on 2024

   The company expects to divest or exit certain non-core semiconductor
   businesses with EUR 300 to 400 million of 2023 revenues during FY2024.

   In terms of business dynamics, ams OSRAM expects sustained weakness in the
   industrial business including some inventory corrections in the industrial
   segment during the first half, on top of normal seasonality of its other
   businesses regularly observed in FQ1. Consequently, the second half of
   FY2024 is expected to come in stronger than the first half, driven by new
   business wins and an expected soft market recovery.

   The company expects positive free cash flow (including divestment
   proceeds) in 2024.

   The ‘Re-establish the Base’ program is expected to deliver approximately
   EUR 75 million run-rate improvements to adjusted EBIT at the end of
   FY2024.         

    

   Mid-term target financial model reconfirmed

   The Group reaffirms its medium-term target financial model announced in
   July 2023, targeting a revenue CAGR of 6-10% over the period 2023 to 2026
   from the readjusted base (taking into account the announced portfolio
   adjustments) and an adjusted EBIT margin of around 15% by 2026. The
   mid-term target financial model assumes the largest growth contribution
   coming from the strong momentum in its target automotive semiconductor
   applications, where it is clear market leader, followed by mobile light
   sensors on the back of the large design-wins that the company secured
   earlier and, thirdly, volume sales from its 8” facility in Kulim,
   Malaysia, besides the other growth drivers in industrial, medical and
   selected consumer applications.

   The model is also underpinned by the company’s expectation of a return to
   a CAPEX to sales ratio of around 10% by 2025, following completion of the
   recent above average investment cycle tied to the investments into the new
   8” capabilities, thereby further improving its free cash flow and full
   implementation of the ‘Re-establish the Base’ program, which is expected
   to deliver approximately EUR 150 million run-rate improvements of adjusted
   EBIT by the end of FY2025. 

    

   Next steps financing plan

   On September 27^th, 2023 the company announced its holistic financing plan
   of EUR 2.25 billion to address debt maturities in 2024 and 2025 and
   increase its pro-forma equity ratio to approximately 30% by reducing debt
   (as per June 2023, calculated as equity / total assets). The plan consists
   of a capital raise with discounted rights issue of EUR 800 million,
   combined with the issuance of new senior unsecured notes (EUR and USD) of
   around EUR 800 million, and infrastructure related asset level
   transactions with proceeds of EUR 300 million in this fall/winter 2023/4.
   The financing is to be completed in 2024 with additional transactions in
   2024 for an aggregate of approximately EUR 350 million through a
   combination of other financial instruments or other transactions, e.g.
   unsecured notes, convertible bonds or bilateral credit lines (the mix of
   which is to be determined based on market conditions). 

   On October 20^th, 2023, the Extraordinary General Meeting approved the
   volume underwritten rights issue of EUR 800 million without any
   contestation. The company now plans to execute the rights issue and senior
   notes placement before year end, subject to market conditions.

   On October 30^th, the company also announced signing close to EUR 450
   million in infrastructure related asset transactions including the sale
   and leaseback of its new Kulim facility with expected proceeds of around
   EUR 400 million. The other transaction related to divesting an already
   phased-out manufacturing facility located in Asia. 

   In view of the more than EUR 150 million higher proceeds from those
   infrastructure related asset-level transactions than initially assumed,
   the final financing amount in 2024 reduces to 200 million EUR, assuming a
   successful issuance of new senior notes of EUR 800 million.

   The company has decided to terminate its program to sell its treasury
   shares.

    

   Additional Information

   Additional financial information for the third quarter as well 2023 is
   available on the company [1]website. The third quarter 2023 investor
   presentation incl. detailed information is also available on the company
   [2]website. ams OSRAM will host a press call as well as a conference call
   for analysts and investors on the third quarter results on Tuesday, 31
   October 2023. The conference call for analysts and investors will start at
   9.30am CET and can be joined via [3]webcast. The press call will take
   place at 10.30am CET. Journalists who would like to join the press call
   can reach out to [4][email protected] or [5][email protected] for
   further information.

    

    

   Disclaimer

   This announcement constitutes neither an offer to sell nor a solicitation
   to buy securities. Any offer regarding any publicly offered securities of
   ams-OSRAM AG (“ams-OSRAM AG” or the “Company,” and together with its
   subsidiaries, the “Group”) in Austria will be made solely by means of, and
   on the basis of, a securities prospectus (including any supplements
   thereto, if any) to be approved by the Austrian Financial Market Authority
   (Finanzmarktaufsichtsbehörde, the “FMA”) and to be published in accordance
   with the Regulation (EU) 2017/1129 (the “Prospectus Regulation”) on the
   website of the Company (www.ams-osram.com). An investment decision
   regarding any publicly offered securities of ams-OSRAM AG should only be
   made on the basis of a prospectus. Any orders relating to securities of
   ams-OSRAM AG received prior to the commencement of a public offering will
   be rejected. If a public offering is to be made in Austria, a securities
   prospectus will be published promptly upon approval by FMA in accordance
   with the Prospectus Regulation and will be available free of charge from
   ams-OSRAM AG during usual business hours, or on the ams-OSRAM AG website.

   This announcement is not a prospectus according to Articles 35 et seqq. of
   the Swiss Financial Services Act (the “FinSA”) and as such does not
   constitute an offer to sell nor a solicitation to buy securities of
   ams-OSRAM AG or any other company. This announcement is made for
   information purposes only and shall not constitute investment advice. Any
   offer regarding any publicly offered securities of ams-OSRAM AG in
   Switzerland will be solely made by means of, and on the basis of, a
   prospectus (including any supplements thereto, if any) that is deemed
   approved  in Switzerland without additional approval procedure in
   accordance with the FinSA, which will be made available free of charge
   from ams-OSRAM AG and UBS AG during regular business hours, or on the
   ams-OSRAM AG website prior to the public offering. An investment decision
   regarding any publicly offered securities of ams-OSRAM AG should only be
   made on the basis of the prospectus published for such purpose.

   This announcement does not constitute or form a part of any offer or
   solicitation to purchase or subscribe for securities in the United States,
   Australia, Canada or Japan, or any other jurisdiction in which such offer
   or solicitation may be unlawful. Any failure to comply with these
   restrictions may constitute a violation of United States, Canadian,
   Australian, Japanese or other applicable securities laws. The securities
   mentioned herein have not been, and will not be, registered under the US
   Securities Act of 1933, as amended (the “Securities Act”).  The securities
   may not be offered or sold in the United States, absent registration or an
   exemption from the registration requirements of the Securities Act. There
   will be no public offer of the securities in the United States.

   This announcement is not a prospectus for the purposes of Prospectus
   Regulation or Regulation (EU) 2017/1129 as it forms part of domestic law
   in the United Kingdom by virtue of the European Union (Withdrawal) Act
   2018 (the “UK Prospectus Regulation”) and does not constitute an offer to
   sell or the solicitation of an offer to purchase securities of ams-OSRAM
   AG. Investors should not subscribe for any securities referred to in this
   document except on the basis of the information contained in any
   prospectus relating to the securities, the former of which may be
   published by the Company in final form on its website (www.ams-osram.com).
   Any such prospectus would include a description of risk factors in
   relation to an investment in the Group. You should conduct your own
   independent analysis of all relevant data provided in any prospectus and
   you are advised to obtain independent expert advice as to the legal, tax,
   accounting, financial, credit and other related aspects before making any
   investment decision.

   No representation, warranty or undertaking, express or implied, is made by
   the Group, its shareholders, or any of the Group’s or its shareholders’
   respective affiliates or any of its or their respective directors,
   officers, employees or agents (the “Representatives”) or any other person
   as to, and no reliance should be placed on, the fairness, accuracy,
   completeness or correctness of the information set forth in this
   announcement or the opinions contained therein or any other statement made
   or purported to be made in connection with the Company or the Group, for
   any purpose whatsoever. No responsibility, obligation or liability
   whatsoever, whether arising in tort, contract or otherwise, is or will be
   accepted by the Group, the Company or its shareholders or any of their
   respective Representatives or any other person for any loss, cost or
   damage howsoever arising from any use of the information contained in this
   announcement, or for information or opinions or for any errors, omissions
   or misstatements contained therein or otherwise arising in connection
   therewith.

   The information in this announcement is of an abbreviated nature and is
   subject to updating, revision, amendment, verification, correction,
   completion and change without notice. None of the Group, the Company or
   its shareholders or any of their respective Representatives or any other
   person undertakes any obligation to provide the attendee or recipient with
   access to any additional information or to update the information in this
   announcement or to correct any inaccuracies in any such information,
   including any financial data or forward-looking statements. Such
   information should be considered in the context of the circumstances
   prevailing at the time and has not been, and will not be, updated to
   reflect material developments which may occur after the date thereof. None
   of the Group, the Company or its shareholders  or any of their respective
   Representatives have independently verified any of the information in this
   announcement.

   This announcement may contain statements about ams-OSRAM AG or the Group
   that are or may constitute or include forward-looking statements.
   Forward-looking statements are statements that are not historical facts
   and may be identified by words such as “plans”, “targets”, “aims”,
   “believes”, “expects”, “anticipates”, “intends”, “estimates”, “will”,
   “may”, “continues”, “should” and similar expressions. These
   forward-looking statements reflect, at the time made, the Group’s beliefs,
   intentions and current targets/aims concerning, among other things, the
   Company’s or the Group’s results of operations, financial condition,
   liquidity, prospects, growth and strategies. Forward-looking statements
   include statements regarding: objectives, goals, strategies, outlook and
   growth prospects; future plans, events or performance and potential for
   future growth; economic outlook and industry trends; developments of the
   Company’s or the Group’s markets; and the strength of the Company’s or any
   other member of the Group’s competitors. Forward-looking statements
   involve risks and uncertainties because they relate to events and depend
   on circumstances that may or may not occur in the future. The
   forward-looking statements in this announcement are based upon various
   assumptions, many of which are based, in turn, upon further assumptions,
   including without limitation, management’s examination of historical
   operating trends, data contained in the Group’s records and other data
   available from third parties. Although the Group believes that these
   assumptions were reasonable when made, these assumptions are inherently
   subject to significant known and unknown risks, uncertainties,
   contingencies and other important factors which are difficult or
   impossible to predict and are beyond its control. Forward-looking
   statements are not guarantees of future performance and such risks,
   uncertainties, contingencies and other important factors could cause the
   actual outcomes and the results of operations, financial condition and
   liquidity of the Company and other members of the Group or the industry to
   differ materially from those results expressed or implied in this
   announcement by such forward-looking statements. No assurances can be
   given that the forward-looking statements will be realized. The
   forward-looking statements speak only as of the date of this announcement.
   The Group expressly disclaims any obligation or undertaking to release any
   updates or revisions to any forward-looking statements to reflect any
   change in the Group’s expectations with regard thereto or any changes in
   events, conditions or circumstances on which any forward-looking
   statements are based. No representation or warranty is made that any of
   these forward-looking statements or forecasts will come to pass or that
   any forecast result will be achieved. Undue influence should not be given
   to, and no reliance should be placed on, any forward-looking statement.

    

     

    

   About ams OSRAM:

   The ams OSRAM Group (SIX: AMS) is a global leader in intelligent sensors
   and emitters. By adding intelligence to light and passion to innovation,
   we enrich people’s lives.  

    
   With over 110 years of combined history, our core is defined by
   imagination, deep engineering expertise and the ability to provide global
   industrial capacity in sensor and light technologies. We create exciting
   innovations that enable our customers in the automotive, industrial,
   medical and consumer markets to maintain their competitive edge and drive
   innovation that meaningfully improves the quality of life in terms of
   health, safety and convenience, while reducing impact on the environment. 
    
   Our around 20,000 employees worldwide focus on innovation across sensing,
   illumination and visualization to make journeys safer, medical diagnosis
   more accurate and daily moments in communication a richer experience. Our
   work creates technology for breakthrough applications, which is reflected
   in over 15,000 patents granted and applied. Headquartered in
   Premstaetten/Graz (Austria) with a co-headquarters in Munich (Germany),
   the group achieved over EUR 4.8 billion revenues in 2022 and is listed as
   ams-OSRAM AG on the SIX Swiss Exchange (ISIN: AT0000A18XM4). 

    

   Find out more about us on [6]https://ams-osram.com  

    

   Ams is a registered trademark of ams-OSRAM AG. In addition, many of our
   products and services are registered or filed trademarks of ams OSRAM
   Group. All other company or product names mentioned herein may be
   trademarks or registered trademarks of their respective owners.  

   Join ams OSRAM social media channels: [7]>Twitter  [8]>LinkedIn 
   [9]>Facebook  [10]>YouTube 

    

   For further information

    

   Investor Relations   Media Relations       

   ams-OSRAM AG     ams-OSRAM AG   

   Dr Juergen Rebel    Bernd Hops   

   Senior Vice President    Senior Vice President   

   Investor Relation    Corporate Communications 

   T: +43 3136 500-0                    T  +43 3136 500-0  

   [11][email protected]   [12][email protected]     

   End of Inside Information

   ══════════════════════════════════════════════════════════════════════════

   31-Oct-2023 CET/CEST News transmitted by EQS Group AG. www.eqs.com

   ══════════════════════════════════════════════════════════════════════════

   Language:    English
   Company:     ams-OSRAM AG
                Tobelbader Straße 30
                8141 Premstaetten
                Austria
   Phone:       +43 3136 500-0
   E-mail:      [email protected]
   Internet:    https://ams-osram.com/
   ISIN:        AT0000A18XM4
   WKN:         A118Z8
   Listed:      Regulated Unofficial Market in Berlin, Dusseldorf, Frankfurt,
                Munich, Stuttgart, Tradegate Exchange; BX, SIX, Vienna Stock
                Exchange (Vienna MTF)
   EQS News ID: 1760905


    
   End of Announcement EQS News Service


   1760905  31-Oct-2023 CET/CEST

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