Challenging market environment continues into Q2 FY19 - Q2 FY19 Earnings Release (preliminary, unaudited figures) - OSRAM Group
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
www.osram.com Challenging market environment continues into Q2 FY19 Q2 FY19 Earnings Release (preliminary, unaudited figures) OSRAM Licht AG | May 8, 2019 Light is OSRAM
Disclaimer
This presentation as well as other reports, presentations, materials delivered to shareholders and press releases may contain forward-looking
statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals
described herein. In addition, our representatives may from time to time make oral forward-looking statements. Forward-looking statements
may include, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects,
competitive environment, regulation and supply and demand. OSRAM Licht AG has based these forward-looking statements on its current
views and expectations and on certain assumptions of which many are beyond OSRAM Licht AG's control. These are subject to a number of
risks, uncertainties and factors, including, but not limited to those described in disclosures, in particular in the sub-chapter Risks in the Annual
Report. Actual financial performance could differ materially from that projected in the forward-looking statements due to the inherent
uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these
uncertainties, readers should not put undue reliance on any forward-looking statements. The information contained in this presentation is
subject to change without notice and OSRAM Licht AG does not undertake any duty to update the forward-looking statements, and the
estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.
This presentation includes references to non-IFRS financial measures, including, but not limited to: FCF, EBITDA, EBITDA margin, capital
expenditure, capital expenditure as percentage of revenue, net financial debt and net working capital. We have provided these measures and
other information in this presentation because we believe they provide investors with additional useful information to assess our performance.
Our use of these supplemental financial measures may vary from others in our industry and should not be considered in isolation or as an
alternative to our results as reported under IFRS.
Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages
may not precisely reflect the absolute figures.
2 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Challenging market environments ongoing
Statement from the CEO Our second quarter developed in line with what we communicated end of March.
The weakness in our core markets continues. Especially the downturn in the
automotive segment leads to high inventories in the Chinese market. Together with a
general downturn of the economy this is the reason we are facing a decline in sales
for our second quarter.
In spite of these challenging environments our long-term strategy along the
implementation of new applications in the LED segment stays intact. Our focus is on
optical semiconductors, automotive and digital applications.
The board responds to the operational challenges systematically. Both our
Second quarter summary
performance programs as well as the implementation of structural measures are in
• Revenue of €862m place and operate at full stretch.
• Adjusted EBITDA margin of 8.1%
• Extended cost and structural measures in This gives us confidence for the rest of the year and we confirm our adjusted full year
place targets.
3 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Q2 FY19 was impacted by ongoing tough economic and market dynamics as
well as from a decline in revenue and adj. EBITDA
Revenue (€m) / comparable growth Adj. EBITDA (€m) / margin
-13.5% -89
938 862 159
16.9%
70
8.1%
Q2/18 Q2/19 Q2/18 Q2/19
Free cash flow (€m)
Comments
+38
Continuous weak growth in China
Ongoing trade conflicts
-76 Increasing inventories in supply chain and at distributors
-114
Q2/18 Q2/19
4 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Economic environments continue to slow down
IFO World economic climate Global Manufacturing PMI
Ifo economic climate index, Calendar year based JP Morgan Purchasing Manager Index, Calendar year based
30 55
25
20 54
15
53
10
5
52
0
-5
51
-10
-15
Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 50
Oct’17 Jan’18 Apr’18 Jul’18 Oct’18 Jan’19 Mar’19
Source: ifo World Economic Survey, Feb 2019 Source: J.P.Morgan and IHS Markit in association with ISM and IFPSM, Mar 2019
5 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Car sales continue to decline across all regions
IHS – Light vehicle production IHS – Global light vehicle production
(YoY comparison) (forecast yearly production number worldwide, FY based)
6%
100 4%
4% 99 Y/Y %
98 million 3%
2% 97
96 2%
0% NAFTA 95
(0.1%) 94
1%
-2% 93 92.7
0%
Europe 92
-4% (-3.4%) 91
-1%
90
-6%
89 -2%
-8%
China 88 -3.0%
(-7.5%) 87 -3%
-10% 86
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 85 -4%
Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-
18 18 18 18 18 18 18 18 18 19 19 19 19
19
Source: IHS monthly data, April 2019
6 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Some key OSRAM customers (automotive Tier 1) falling short of their
agreed-on purchasing volumes on a YTD view
2019
% growth LED automotive: Deviation between VPA to Mar
Act 2018 vs contract 2019 (01.01.19-31.12.19) vs. actual orders YTD (CY)
Customer 1 +22% -41%
Customer 2 +9% -14%
Customer 3 -13% +3%
Customer 4 -2% -1%
Customer 5 -6% -46%
Customer 6 +16% +32%
Customer 7 +0% -28%
Customer 8 +6% -4%
Customer 9 +15% -24%
• Market environment, destocking and share of wallet are key reasons for shortfalls
7 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Saving targets of Performance Programs
increased to more than €200 million by FY 2021 Status Q2/19
Level of completion
Define Detail Implement
• Divest LS North America business
OSRAM
• Divest LS European business (Siteco)
• Execute performance programs: Overhead, Footprint
• Permanent Portfolio Mgmt. towards Photonics Champion
• Drive competitiveness in core business
Opto
• Accelerate growth in new application fields e.g. sensing and µLED
Semiconductors
• Extend value chain towards Component+
• Fit for the Future OS
• Execute growth plan in OSRAM CONTINENTAL
Automotive
• Stay #1 in light sources
• Aftermarket growth with light sources and portfolio extension
• Implement new organizational setup (DI)
Digital
• Transform lighting electronics into digital infrastructure provider
• Ramp-up digital business in focus applications
8 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Summary Key Financial Performance Q2 FY19
Revenue (€m) / comp. growth Market weakness in Automotive and General Lighting continued to
2.7% -13.5% drive revenue decline in all segments
938 862 Destocking in industry supply chains progressed well into Q2 FY19
No visible recovery in China
Q2/18 Q2/19
Adj. EBITDA (€ m) / margin Q2 FY19 adjusted EBITDA margin @ 8.1%; significant decline vs. PY
16.9%
8.1% due to negative volume and degression effects; pricing not completely
159 offset by productivity measures
70
EBITDA Special Items in Q2 FY19 at €-59m
Q2/18 Q2/19
Free Cash Flow (€ m)1) Capex of €61m compared to €149m in Q2 FY18
Net income: €-91m from continuing operations impacted by an
impairment at Digital Systems (€-40m); €-6m from discontinued
-114
-76 operation
Q2/18 Q2/19
1) Defined as net cash provided by (used in) operating activities less capital expenditures.
9 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Significant revenue decline driven by all segments
Revenue (€m)
OSRAM Group: Revenue bridge Q2 FY19 YoY Comments
Slightly positive impact from foreign exchange1) and portfolio
938 862 changes
2.6% 2.7% -13.5%
IFRS 15 effect in Q2/19 approx. -0.6%
APAC decline largely impacted by China (-32%)
Revenue FX Portfolio Comparable Revenue
Q2/18 growth Q2/19
Revenue growth Q2 FY19 YoY Regional split Q2 FY19
Nom. Comp.
FX Portfolio Comp. growth
growth growth
30.3% EMEA -8.3%
36.8%
Opto Semiconductors -15.3% 2.9% 0.7% -18.8% APAC -21.9%
Automotive -7.4% 2.6% 0.6% -10.6% Americas -8.9%
Digital 3.0% 2.5% 9.1% -8.5% 32.9%
1) EUR/USD @ 1.14 in Q2/19 vs. 1.23 in Q2/18.
10 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Profitability impacted by negative volume and degression effect
Adjusted EBITDA (€m) / Adjusted EBITDA Margin (%)
Adjusted EBITDA1) Q2 FY19 YoY Adjusted EBITDA1) Q2 FY19 YoY
159
159
-52 -79
-24 70 16.9% -8
70
16.9% -8 -5 -2
8.1% 8.1%
Adj. EBITDA OS AM DI Other/ Adj. EBITDA Adj. EBITDA Volume/ Price erosion Other Adj. EBITDA
Q2/18 Corporate Q2/19 Q2/18 Degression 2) & Inflation Q2/19
vs. Productivity 2)
Adjusted EBITDA margin Q2 FY19 Comments
Adj. EBITDA FX impact Profitability sharply impacted by negative volume/ degression
margin YoY
effects in all segments; negative profitability of DI driven by
Opto Semiconductors 14.6% 3.8% lower utilization in DS factories as GL markets stay soft
Automotive 9.7% 0.5%
Adj. EBITDA in corporate items of €-22m
Digital -1.6% -0.7%
Savings from strategic performance programs of €24m
1) Adjustment for special items (S.I.) includes a.o. transformation costs, substantial legal and regulatory matters, and costs related to mergers and acquisitions activities including the sale of subsidiaries, investments and other businesses.
2) Related to COGS.
11 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Saving targets of performance programs now increased
to more than €200m by FY211)2)
Cross-functional & BU-specific performance programs
Targeted Gross Savings
Overhead Transformation
productivity of plants
global Transformation Costs2)3) Comments
~40% of the FY19 savings
FY18: € 13m FY18: € 5m FY18: € 69m have been realized YTD
FY19: € 45-50m FY19: € 40-45m FY19: € 80-90m
Increase in total savings mainly
due to extended initiatives at OS
€ 100-110m1) € 80-90m1) 80% of the transformation costs
for FY19 occurred YTD
1) Estimated annualized savings by end of FY21 compared to FY17 baseline. 2) Excl. European luminaire business and Sylvania Lighting Solutions (USA). 3) Recorded as Special Items.
12 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Segments: Key financials Q2 FY19
Revenue (€m) / Comp. growth (%) Adj. EBITDA1) (€m) / Adj. EBITDA margin (%)
Comments
OS
Revenue decline in all business lines, due to continued weakness of auto
-18.8% demand and weak overall demand in China; inventory restocking in
24.5%
OS 14.6% distributor supply chains (Industry & Mobile, GL) not yet visible
426 361 105 High operating leverage and lower volumes drove profitability down
53
Significant negative cost absorption effects caused by decreasing
Q2/18 Q2/19 Q2/18 Q2/19
inventories
Structural cost measures intensified which should lead to additional
savings in upcoming quarters
-10.6%
AM
AM 482 446 14.0% Overall weak demand lead to a decline in both traditional and LED
9.7%
67 volumes in OEM channels, particularly driven by China and Europe
43
Profitability impacted by lower volume. In addition by ramp-up costs at
Q2/18 Q2/19 Q2/18 Q2/19
OSRAM CONTINENTAL, mainly R&D and SG&A
DI
Clear comparable revenue decline in most business lines; nominal topline
2.0%
-8.5% growth driven by acquisition of Fluence
DI 4
-4 Compared to Q1/19, almost all businesses were able to slow down the
215 222
-1.6% decline in revenue; especially the Entertainment business and Dynamic
Q2/18 Q2/19 Q2/18 Q2/19 Lighting showed sequential improvement in revenue development
Adj. EBITDA below prior year; partly due to negative volume and lower
utilization, largely driven by DS
1) Adjustment for special items (S.I.) includes a.o. transformation costs, substantial legal and regulatory matters, and costs related to mergers and acquisitions activities including the sale of subsidiaries, investments and other businesses.
13 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Negative FCF due to Capex and reduction of trade payables
Free Cash Flow / Net Debt (€m)
Free Cash Flow1) bridge Q2 FY19 YoY Net debt bridge Q2 FY19
EBITDA 11
-172
-76
Trade Receivables 13 -107
22 -10 -8
-350
Net debt FCF Dividend Proceeds and Other Cash flow Net debt
Inventories 28 Dec 31, 2018 payment payments investing and from disc. op. March 31, 2019
from sales of financial items and others
business
activities
Trade Payables -57
Income taxes paid -16 Capital expenditure (percent of revenue) Q2 FY19 YoY
-88
Capex -61 149 (15.9%)
OS
AM
Other 6
133 61 (7.0%) DI
45 Others /
1) corporate
FCF -76 11 1 10 1
4 5
1)
Q2/18 Q2/19
Defined as net cash provided by (used in) operating activities less capital expenditures.
14 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Outlook for FY191)2)3)
Revenue Adj. EBITDA margin Free Cash Flow
Decline of comparable Adjusted EBITDA Negative Free Cash Flow
revenue between margin between
11% and 14% of 8% to 10% €-50m and €-150m3)
1) based on an exchange rate EUR/USD of 1.15; based on cont. operations, excl. European luminaire business and Sylvania Lighting Solutions (USA). 2) Outlook as communicated in ad hoc announcement on March 28, 2019. 3) Excl. proceeds from possible divestments.
15 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Financial calendar and IR contact information
Upcoming events
May 9, 2019
Roadshow London, UK
May 10, 2019
Roadshow Frankfurt, Germany
May 16, 2019
Northern European Conference, Boston, U.S.
May 17, 2019
Roadshow New York, U.S.
Investor Relations contact
Telephone + 49 89 6213 4259
Internet http://www.osram-group.de/en/investors
Email ir@osram.com
16 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Appendix
17 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Key financial metrics (continuing operations)
(preliminary, unaudited)
Group (€m) Q2 FY18 Q2 FY19 Change (y-o-y)
nom. -8.2%
Revenue 938 862 comp. -13.5%
Gross margin 34.7% 23.8% -1090 bps
R&D -97 -122 26.2%
SG&A -146 -152 4.0%
EBITDA 146 11 -92.4%
EBITDA margin 15.5% 1.3% -1420 bps
Adj. EBITDA 159 70 -55.9%
Adj. EBITDA margin 16.9% 8.1% -880 bps
Financial result, including at-equity result (continuing operations) -3 -7 -
Income (loss) before income taxes (continuing operations) 79 -110 -239.0%
Taxes -22 19 -186.2%
Net income (loss) (continuing operations) 57 -91 -259.7%
Diluted EPS in € (continuing operations) 0.58 -0.86 -248.7%
Free cash flow (continuing operations) -114 -76 -33.1%
CAPEX 149 61 -59.3%
Net debt 61 -350 -
Equity ratio 58.7% 53.5% -520 bps
Employees (in thousands) 25.6 25.0 -2.0%
18 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Segment overview (continuing operations)
(preliminary, unaudited)
Q2 FY19 (€m) OS AM DI CIE OSRAM
Licht Group
Revenue 361 446 222 -167 862
Change % vs. PY reported -15.3% -7.4% 3.0% -8.2%
Change % vs. PY comparable -18.8% -10.6% -8.5% -13.5%
EBITDA 8 39 -8 -28 11
EBITDA margin 2.2% 8.8% -3.5% 1.3%
Special items EBITDA -45 -4 -4 -6 -59
therein transformations costs -44 -2 -3 -6 -55
EBITDA before special items 53 43 -4 -22 70
EBITDA margin before special items 14.6% 9.7% -1.6% 8.1%
Assets1) 1,390 818 444 1,935 4,588
Free cash flow -13 66 -40 -90 -76
Additions to intangible assets and property, plant and equipment 45 10 5 1 61
Amortization 1 6 42 1 50
Depreciation 46 11 7 0 64
1) Net assets on segment level; total assets on group level; CIE includes reconciling items.
19 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Consolidated statement of income (continuing operations)
(preliminary, unaudited)
Three months Three months ended
ended March 31 March 31
2019 2018
Revenue 862 938
Cost of goods sold and services rendered -657 -613
Gross profit 205 325
Research and development expenses -122 -97
Marketing, selling and general administrative expenses -152 -146
Other operating income 8 2
Other operating expense -41 -2
Income (loss) from investments accounted for using the equity method,
net -2 -2
Interest income 0 1
Interest expense -4 -3
Other financial income (expense), net -1 0
Income (loss) before income taxes OSRAM (continuing operations) -110 79
Income taxes 19 -22
Income (loss) OSRAM (continuing operations) -91 57
Income (loss) from discontinued operation, net of tax -6 -12
Net income (loss) -97 45
Attributable to:
Non-controlling interests -7 1
Shareholders of OSRAM Licht AG -90 44
Basic earnings per share (in €) -0.93 0.45
Diluted earning per share (in €) -0.92 0.45
Basic earnings per share (in €) OSRAM (continuing operations) -0.86 0.58
Diluted earning per share (in €) OSRAM (continuing operations) -0.86 0.58
20 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Net Income OSRAM (continuing operations)
(preliminary, unaudited)
Three months ended Three months ended
March 31 March 31
2019 2018
Net Income (loss) OSRAM (continuing operations) -91 57
Special Items (Profit) 65 16
Tax attributable to Special Items (Profit) -11 -5
Net Income OSRAM (continuing operations) adjusted1) -37 69
Non-controlling interests -7 1
Net Income OSRAM (continuing operations) adjusted, attributable to Shareholders of
OSRAM Licht AG -29 68
Diluted earning per share (in €) OSRAM (continuing operations) adjusted -0.30 0.70
Diluted earning per share (in €) OSRAM (continuing operations) -0.86 0.58
Diluted number of shares 96.9 96.9
Tax rate 18% 28%
1) Adjustment for special items (S.I.) includes a.o. transformation costs, substantial legal and regulatory matters, and costs related to mergers and acquisitions activities including the sale of subsidiaries, investments and other businesses.
21 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Consolidated statement of financial position (continuing operations)
(preliminary, unaudited)
As of As of As of As of
March 31 September 30 Macrh 31 September 30
2019 2018 2019 2018
Assets Liabilities and equity
Current Assets Current liabilities
Cash and cash equivalents 255 333 Short-term debt and current maturities of long-term debt 469 233
Available-for-sale financial assets - 0 Trade payables 540 714
Other current financial liabilities 82 40
Trade receivables 551 614
Contract liabilities 19 -
Other current financial assets 38 45
Current provisions 66 74
Contract assets 8 -
Income tax payables 76 110
Inventories 778 743 Other current liabilities 336 373
Income tax receivables 35 49 Liabilities associated with assets classified as held for sale 74 12
Other current assets 145 151 Total current liabilities 1,662 1,555
Assets held for sale 72 49 Long-term debt 136 152
Total current assets 1,882 1,984 Pension plans and similar commitments 174 162
Goodwill 341 369 Deferred tax liabilities 14 14
Other intangible assets 268 296 Provisions 32 26
Property, plant and equipment 1,565 1,621 Other financial liabilities 23 24
Investments accounted for using the equity method 63 66 Other liabilities 104 121
Other financial assets 21 19 Total liabilities 2,146 2,053
Equity
Deferred tax assets 385 309
Common stock, no par value 97 105
Other assets 63 65
Additional paid-in capital 1,669 2,034
Total assets 4,588 4,730
Retained earnings 494 780
Other components of equity 66 3
Treasury shares, at cost -13 -386
Total equity attributable to shareholders of OSRAM Licht AG 2,312 2,536
Non-controlling interests 130 140
Total equity 2,442 2,676
Total liabilities and equity 4,588 4,730
22 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019Consolidated statement of cash flows (continuing operations)
(preliminary, unaudited)
Three months Three months Three months Three months ended
ended March 31 ended March 31 ended March 31 March 31
2019 2018 2019 2018
Cash flows from investing activities
Cash flows from operating activities
Additions to intangible assets and property, plant and equipment -61 -149
Net income (loss) -97 45
Acquisitions, net of cash and cash equivalents acquired -2 0
Adjustments to reconcile net income (loss) to cash provided Purchases of investments -5 -1
Income (loss) from discontinued operation, net of tax 6 12 Proceeds and payments from sales of investments, intangible assets, and
property, plant and equipment 0 0
Amortization, depreciation, and impairments 114 63
Proceeds and payments from the sale of business activities 22 1
Income taxes -19 22 Net cash provided by (used in) investing activities from continuing
Interest (income) expense, net 4 2 operations -45 -150
(Gains) losses on sales and disposals of businesses, intangible Net cash provided by (used in) investing activities from discontinued operation -1 -1
assets, and property, plant and equipment, net 1 0 Net cash provided by (used in) investing activities - OSRAM (continuing
operations) -46 -151
(Income) loss from investments 2 2
Cash flows from financing activities
Other non-cash (income) expenses 2 1 Purchase of treasury stocks -7 -
Change in current assets and liabilities Proceeds from capital increases at subsidiaries with minority interests 3 -
(Increase) decrease in inventories 28 -37 Repayment of long-term debt -8 -2
(Increase) decrease in trade receivables 13 -37 Change in debt and other financing activities 198 -1
Interest paid -2 -1
(Increase) decrease in other current assets 13 11
Dividend payment to the shareholders of OSRAM Licht AG -107 -107
Increase (decrease) in trade payables -57 -17 Net cash provided by (used in) financing activities - OSRAM (continuing
Increase (decrease) in current provisions -3 0 operations) 76 -112
Increase (decrease) in other current liabilities -8 -11 Net cash provided by (used in) financing activities from discontinued operation - -
Net cash provided by (used in) financing activities - OSRAM Licht Group
Change in other assets and liabilities 2 -4 (total) 76 -112
Income taxes paid -16 -17 Effect of exchange rates on cash and cash equivalents 4 -1
Net increase (decrease) in cash and cash equivalents 12 -249
Interest received 0 1
Cash and cash equivalents at beginning of period 243 504
Net cash provided by (used in) operating activities - OSRAM Cash and cash equivalents at the end of period 255 255
(continuing operations) -16 35 Less: Cash and cash equivalents of assets classified as held for disposal and
Net cash provided by (used in) operating activities from discontinued discontinued operation at end of period 0 0
operation -7 -20 Cash and cash equivalents at end of period (consolidated statement of
Net cash provided by (used in) - OSRAM Licht Group (total) -22 15 financial position) 255 255
23 OSRAM Licht AG
Q2 FY19 Earnings Release (preliminary, unaudited figures) | May 8, 2019You can also read
