Feb 13, 2017: Osram had a good start into fiscal 2017 as expected and accelerated growth in the first quarter. On a comparable basis, i.e. adjusted for portfolio and currency effects, revenue in the three months ending Dec. 31 rose almost 8% year on year and reached €991 million. In the year-earlier period, comparable growth was around 4%. This trend was driven by an ongoing healthy opto semiconductor business and continued robust demand from the automotive industry. On a nominal basis, revenue increased around 5%. Adjusted for special items, EBITDA2 rose about five percent from a year earlier to €179 million, translating into a margin of 18%. Net income from continuing operations was €92 million in the first quarter. It included a one-time gain from a real estate sale in Korea that resulted in a low double-digit million-euro contribution. In the year-earlier period, Osram had recorded a book gain of around €270 million from the sale of its Felco shares. Adjusted for these two one-time items, net income increased in the first quarter of fiscal 2017. Based on the performance in the first three months and the current market development, Osram confirms its outlook for fiscal 2017.
Earnings before interest, taxes, depreciation and amortization
Osram reporting segments in the first quarter
The LED components business (Opto Semiconductors, or OS) reported growth in all segments in the first quarter and posted a year-on-year revenue increase of 15 percent on a comparable basis. Growth was especially strong in automotive and the infrared business in general. With 26.2 percent, the EBITDA margin was again on a good level. Construction of the new LED chip factory in Kulim, Malaysia, continues to progress according to plan.
The Specialty Lighting (SP) reporting segment, which includes the Automotive Lighting and Professional & Industrial Applications units, benefited from continued robust demand from the automotive industry and recorded revenue growth of more than eight percent on a comparable basis in the first quarter. The adjusted EBITDA margin showed a slight year-on-year increase and reached 16.3%. Osram was recently awarded as ‘Automotive Lighting Brand of 2016’ in China.
In the Lighting Solutions & Systems (LSS) reporting segment, which comprises the luminaires and systems business, revenue rose around 2% on a comparable basis, supported among other things by a strong digital components business. The adjusted EBITDA margin of 0.5 percent was slightly above break-even. In the first quarter, Osram agreed to buy a stake of 47.5% in Tvilight, a Dutch company offering sensor technology and smart light management software for smart city solutions, among other things.
Discontinued operations in the first quarter
In view of the agreed sale, the general lighting lamps business (Ledvance) is now reported under discontinued operations. Due to a seasonally strong business at Ledvance, net income from discontinued operations was €6 million in the first quarter. Osram continues to believe that the sale of Ledvance will be completed during the course of fiscal 2017.
Outlook for fiscal 2017
Osram confirms its outlook for fiscal 2017 given in November. The following statements relate to continuing operations and therefore do not include the general lighting lamps business, which in July 2016 Osram agreed to sell. For fiscal 2017, the managing board expects revenue growth on a comparable basis of five to seven percent. The adjusted EBITDA margin is anticipated to be at least 16 percent. Diluted earnings per share are expected to be in the range of €2.35 to €2.65, provided the share buyback program that started in 2016 continues as planned. 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.
Key financial data of OSRAM Licht Group in the first quarter
(Unaudited figures. Figures in millions of euros, margins in percent, employees as of December 31. Negative values in brackets.)
Reporting segment performance in the first quarter3
3Fiscal year 2016 figures are reconciled to reflect that beginning with fiscal 2017, further revenue generated with LED components for automotive customers is shown within the Specialty Lighting reporting segment.