OSRAM continues technological transformation

Transcription

1 OSRAM continues technological transformation Q2 FY18 Earnings Release (preliminary, unaudited figures) May 3, 2018 Light is OSRAM

2 Disclaimer This presentation 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. 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. has based these forward-looking statements on its current views and expectations and on certain assumptions of which many are beyond s control. 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 forwardlooking statements. The information contained in this presentation is subject to change without notice and 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, EBITA, 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 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

3 Pushing ahead with our growth strategy in a challenging environment CEO statement Taking a look at the first half of our fiscal year shows that we faced tougher markets and a more challenging environment. In addition the FX development was not in our favor. Nevertheless, we are pushing ahead with our growth strategy and continue to strengthen our market position as Highlights Q Currency and market effects reduce growth 1,012m revenue equals +1.8% comparable growth; adjusted EBITDA margin at 15.1% High-tech growth strategy continues Future concept of OSRAM enters next phase of implementation a high-tech company. 3

4 Currency and market topics shape development of Q2 FY18 Revenue ( m) / comparable growth Adj. EBITDA ( m) / margin 1,051 Q2/ % 1,012 Q2/18 Strong Euro strains revenue with approx. -90m % Q2/17-30 Adj. EBITDA impacted by 153 currency effects, ramp-up costs and 15.1% higher R&D of approx. -50m Q2/18 Free Cash Flow ( m) Earnings per share, diluted ( ) 5 FCF as expected reflects high invest at OS EPS reduced due to currency effects and special effects Q2/ Q2/18 Q2/17 Q2/18 4

5 Improvement of business environment expected during the second half of the year, driven by tailwinds from automotive sector Development of light vehicle production (YoY comparison) US nonresidential construction and electric lighting orders IHS actual H1/18 IHS estimate H2/18 Census Bureau US Construction Nonresidential SA, YoY US Durable Goods New Orders Electric Lighting Equipment, 12 months rolling, YoY 6.1% 15% 4.5% 4.2% 2.8% 2.8% 10% 5% -0.1% -0.9% 0% -5% World Europe -4.2% NAFTA China -10% 02/13 02/14 02/15 02/16 02/17 02/18 Source: IHS report 04/2018 calendar year figures recalculated according to OSRAM fiscal year. 5

6 Upturn for semiconductor business expected in H2 FY18 Automotive Industry & Mobile Devices Capacity build-up Order book reflects improvement across customers & products Inventory levels of customers normalized Design wins for new innovative products Positive signals especially for Projection, Stage and Video Wall First sales out of Kulim delivered as of April 2018 Aiming for double digit growth for 2 nd half of FY18 6

7 OSRAM focuses on digital growth trends Mobility Horticulture Sensing Smart Cities JV contract with Continental signed Development of segments with high growth and margin Invest in VCSEL: Technology lead expanded Acquisition of LEDdriver of Trilux (# 3 in Germany) 7

8 Systematic execution of the strategy at SP OS SP LSS Focus Applications SP Strategy Automotive SSL lighting Drive innovation Front lighting, electronics and sensor system Signing OSRAM Continental GmbH Automotive TRAD lighting Last man standing Market leader (NAFTA and EMEA) Grow share in APAC Special lighting Focus and expand Entertainment and Industry 8

9 The OSRAM CONTINENTAL GmbH will be the leader in intelligent lighting solutions, driving additional value creation for OSRAM OS SP LSS LED Module OSRAM Continental GmbH Electro -nics System Fixture OSRAM Continental GmbH revenue expectation ( bn) ~1 ~0.5 Focus Applications JV Strategy Dynamic, High Resolution Light Distribution Intelligent Lighting Systems Shaping the future of mobility lighting Holistic approach: sensing-thinking-lighting Seamless connectivity Exterior & Interior Modular Subsystems: plug & play integration Adj. EBITDA margin Target range JV 12 14% 9

10 Systematic execution of the strategy at SP OS SP LSS Focus Applications SP Strategy Automotive SSL lighting Drive innovation Front lighting, electronics and sensor system Joint venture with Continental Automotive TRAD lighting Last man standing Market leader (NAFTA and EMEA) Grow share in APAC Acquisition of Fluence Special lighting Focus and expand Entertainment and Industry 10

11 Acquisition of Fluence opens growth opportunities in horticulture OS SP LSS Components Connected Hardware Farm / Light Control Applications on IoT Platform Fluence Revenue expectation ( m) >80 OSRAM OS >30 Fluence Focus Applications SP Strategy Special lighting Focus and expand Entertainment and Industry Adj. EBITDA margin Target range >15% 11

12 Systematic execution of the strategy at OS OS SP LSS Focus Applications OS Strategy Acquisition of Vixar Visualization and Sensing Shape the future Win in new business opportunities 3D Sensing incl. Face Recognition General Lighting Gain competitive scale Mega -sites in low-cost-locations (Kulim, Wuxi) Gesture/Driver Monitoring Premium, IR Emitter, Laser Grow the core Strengthen technology leadership Surveillance Military Medical 12

13 OS offers the broadest product portfolio in the industry including VCSEL OS SP LSS VCSEL with multiple applications exemplary VIXAR acquisition allows full light emitter offering 3D Sensing incl. Face Recognition Autofocus LED EEL 1) VCSEL Consumer Mobile Smart Glasses Automotive Gesture/Driver Monitoring LIDAR Industry Surveillance Military Medical Machine vision Osram OS existing business Vixar acquisition 1) EEL = Edge emitting laser. 13

14 High potential for profitable growth OS SP LSS Foundries VCSEL value chain: in-house and external capabilities in target state EPI Chip Package Module Design capabilities from EPI to package VCSEL Revenue expectation ( m) > Focus VCSEL strategy Consumer Mobile & Automotive Industry Strengthen OS product/technology offering Build upon strong know-how & market access Make use of in-house & sourcing capabilities Drive existing other Vixar business Continue specialized business at Vixar Develop new business opportunities for OS Adj. EBITDA margin Target range >25% 14

15 Systematic implementation of the strategy at LSS OS SP LSS Focus Applications LSS Strategy LS General Lighting Get profitable Portfolio streamlining Cost structure, Footprint M&A Digitale process Elektronik started for service business in the US DS Smart Components Selective expansion Organic and inorganic growth Acquisition BAG Electronics of Trilux-Group New business Beyond Lighting Buy and Build Digital Lumens, Beaconsmind, 15

16 Driving OSRAM s profitability Strategy Performance Programs Structure New structure for countries and BU sales & distribution Differentiation of HQ and BU end-to-end functions Lean HQ -20% 1) Streamlining structures within BUs Transformation of production sites 1) Target of overhead cost reduction (gross savings before cost inflation). 16

17 Efficiency program initiated to support OSRAM s long-term profitability Drivers Focus Targeted Gross Savings 1) Transition towards high-tech company Improve overhead productivity FX headwinds Manufacturing productivity Consolidation of SP manufacturing footprint ( Last Man Standing Strategy SP) Future Footprint Concept (SP, LSS) Overhead cost reduction Benchmark costs in supporting functions (e.g. Finance, IT, etc.) Address Stranded Cost from Ledvance carve-out Improve overhead productivity in LSS and SP ~ million Cost of program expected between million 2) 1) Estimate (before cost inflation). 2) Timing pending consultation process; expected within CY 2018 (before tax). 17

18 OSRAM the long-term growth trend continues Mid- to long-term: Global growth trends remain strong for OSRAM LED-share keeps rising thanks to segments with high growth and margin (e.g. Automotive and Smartphones) OSRAM is excellently positioned as a high-tech player in the long-term 18

19 Summary financial performance Q2 FY18 Q2 FY18 comparable revenue growth at 1.8%; growth continues for OS; LED components growth in Automotive limited as destocking continued; SP traditional light sources with expected decline; Market environment for LSS remains challenging Q2 FY18 adjusted 15.1%; negative impact from FX of 130bps and from R&D of 130bps; OS close to 28% adjusted EBITDA profitability when adjusting for negative FX impact Free Cash Flow negative with 132m as expected, mainly driven by footprint expansion CAPEX at OS Q2 FY18 reported EPS at 46 Eurocents; adjusted EPS at 63 Eurocents; negative FX impact of ~19 Eurocents Special Items in Q2 FY18 EBITDA at -19m as expected 19

20 Q2 FY18 revenue level negatively impacted by stronger Euro Revenue ( m) OSRAM Group: Revenue bridge Q2 FY18 YoY Comments 1, % 2.8% 1.8% 1,012 Foreign exchange (FX) impacts largely driven by appreciation of EUR against USD 1.23 vs in Q2/17 APAC growth driven by OS and LSS Americas growth driven by SP Aftermarket performance Revenue Q2/17 FX Portfolio Comparable growth Revenue Q2/18 EMEA growth negative: Reduction in Automotive demand for Xenon & Halogen; Traditional ballast market with double digit decline Revenue growth Q2 FY18 Regional split Q2 FY18 Nom. growth FX Portfolio Comp. growth Opto Semiconductors -0.7% -9.1% 1.4% 7.0% 27.3% 38.2% EMEA APAC Comp. growth -4.7% 8.2% Specialty Lighting -8.7% -7.9% 0.0% -0.8% Lighting Solutions & Systems -9.0% -7.0% 3.8% -5.8% 34.5% Americas 2.7% 20

21 Margin continues to be impacted by FX, ramp-up costs and R&D invest Adjusted EBITDA ( m) / Adjusted EBITDA margin (%) Adjusted 1) EBITDA margin Q2 FY18 YoY Adjusted EBITDA Q2 FY18 YoY 17.4% -1.3% -1.3% 0.3% 15.1% Adj. EBITDA margin Q2/17 FX R&D Other Adj. EBITDA margin Q2/18 Adj. EBITDA Q2/17 FX Ramp-up R&D Volume / Mix / Other Adj. EBITDA Q2/18 Adjusted EBITDA margin Q2 FY18 Adj. EBITDA margin FX impact YoY Opto Semiconductors 24.5% -3.3% Specialty Lighting 14.2% -1.0% Lighting Solutions & Systems -6.4% 0.2% Comments 1.23 in Q2/18 vs in Q2/17 Adjusted EBITDA margin negatively impacted by FX, ramp-up costs and R&D expenses; positive effect from higher volume OS excluding FX effect close to 28% Adjusted EBITDA in Corporate Items: -17m Special -19m as expected 1) Adjustment for special items (S.I.) includes e.g. 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

22 Segments: Key financials Q2 FY18 Revenue ( m) / Comp. growth (%) Adj. 1) EBITDA ( m) / Adj. EBITDA margin (%) Comments OS +7.0% Q2/17 Q2/ % 124 Q2/ % 105 Q2/18 OS Automotive with slow growth as destocking continued; tough y-o-y comps for Infrared due to limited capacity High profitability maintained despite negative impacts from FX (-3.3%), ramp-up costs and higher innovation spend SP -0.8% Q2/17 Q2/ % 99 Q2/ % 79 Q2/18 SP Strong growth in Aftermarket; continued decline of first equipment business in traditional light sources (Xenon/Halogen) as expected; LED Components growth negatively impacted by destocking in supply chain Profitability below PYQ mainly due to FX (-1%) LSS -5.8% Q2/17 Q2/ % Q2/ % Q2/18 LSS Market environment in US and EMEA not showing signs of near-term recovery Adj. EBITDA impacted by lower volume and elevated price competition especially in traditional ballast business in EMEA Structural cost measures ongoing Actively exploring M&A interest for LS Service business in US 1) Adjustment for special items (S.I.) includes e.g. transformation costs, substantial legal and regulatory matters, and costs related to mergers and acquisitions activities including the sale of subsidiaries, investments and other businesses. 22

23 Free cash flow reflects ongoing capacity investment at OS Free Cash Flow / Asset Management / Net Liquidity ( m) Free cash flow 1) Q2 FY18 YoY Comments Free cash flow in line with expectations, largely driven by capital expenditure plan implementation at OS -132 Increase in inventories mainly at OS; reduction expected in the second half of FY18 Q2/17 Q2/18 Net working capital (days outstanding 2) ) Q2 FY18 Capital expenditure (percent of revenue) Q2 FY18 YoY +22.4% 550 (48) 673 (60) Dec 31, 2017 Mar 31, 2018 Inventories Trade receivables Trade payables 104 (9.9%) Q2/ (19.6%) Q1/ (14.9%) Q2/18 OS SP LSS Others / corporate 1) Defined as net cash provided by (used in) operating activities less capital expenditure. 2) Defined as operating net working capital divided by revenue (last twelve months) times 365 days. 23

24 Reported EPS impacted by FX and Special Items Earnings per share 1) ( ) / Net liquidity bridge ( m) Adjusted 2) EPS Q2 FY18 YoY Net liquidity bridge Q2 FY FX FX effect EPS from S.I. Reported EPS Q2/17 Q2/18 Net liquidity Dec 31, 2017 FCF Acquisitions and financial investments Proceeds and payments from sales of business activities Dividend payment Cash flow from disc. operations and others Net liquidity Mar 31, 2018 Comments Reported EPS of 0.46 below PYQ due to FX effect, higher depreciation and Special Items FX impact compared to previous year ~19 Eurocent Tax rate at approx. 28% Comments Net liquidity driven by higher capital expenditure spend and dividend payment 1) Diluted. 2) Adjustment for special items (S.I.) includes e.g. transformation costs, substantial legal and regulatory matters, and costs related to mergers and acquisitions activities including the sale of subsidiaries, investments and other businesses. 24

25 Outlook for FY18 1) Comparable revenue growth: ~ 3% - 5% Adjusted EBITDA 2) : ~ 640m Free cash flow: ~ -50m m Earnings per share 2) : ~ ) Based on an exchange rate EUR/USD of ) Adjusted outlook for the current fiscal year 2018 does not reflect the extraordinary expense of million (before tax) for efficiency programs. 25

26 Financial calendar and IR contact information Upcoming events May 4, 2018 Roadshow Frankfurt May 8-9, 2018 Roadshow New York, Chicago & London May 15, 2018 Roadshow Paris May 22-23, 2018 JP Morgan Technology Conference in London & Berenberg Conference Tarrytown, New York Investor Relations contact Telephone Internet ir@osram.com 26

27 Appendix 27

28 Key financial metrics (preliminary, unaudited) Group ( m) Q2 FY17 Q2 FY18 Change (y-o-y) nom. -3.7% Revenue 1,051 1,012 comp. 1.8% Gross margin 36.2% 34.3% -200 bps R&D % SG&A % EBITDA % EBITDA margin 16.1% 13.2% -290 bps Adj. EBITDA % Adj. EBITDA margin 17.4% 15.1% -230 bps Financial result (including at-equity result) % Income before income taxes % Taxes % Net income % Diluted EPS in % Free cash flow n/a CAPEX % Net liquidity % Equity ratio 59.7% 58.7% -100 bps Employees (in thousands) % 28

29 Segment overview (preliminary, unaudited) Q2 FY18 ( m) OS SP LSS CIE OSRAM Licht Group Revenue ,012 Change % vs. PY reported -0.7% -8.7% -9.0% -3.7% Change % vs. PY comparable 7.0% -0.8% -5.8% 1.8% EBITDA EBITDA margin 24.5% 13.4% -10.3% 13.2% Special items EBITDA therein transformations costs EBITDA before special items EBITDA margin before special items 24.5% 14.2% -6.4% 15.1% Assets 1) 1, ,794 4,102 Free cash flow Additions to intangible assets and property, plant and equipment Amortization Depreciation ) Net assets on segment level; total assets on group level; CIE includes reconciling items. 29

30 Consolidated statement of income (preliminary, unaudited) Three months ended March 31 Three months ended March Revenue 1,012 1,051 Cost of goods sold and services rendered Gross profit Research and development expenses Marketing, selling and general administrative expenses Other operating income 3 0 Other operating expense -2 0 Income (loss) from investments accounted for using the equity method, net -3 0 Interest income 1 3 Interest expense -2-3 Other financial income (expense), net 0-1 Income before income taxes OSRAM (continuing operations) Income taxes Income OSRAM (continuing operations) Income (loss) from discontinued operation, net of tax Net income Attributable to: Non-controlling interests 1 0 Shareholders of Basic earnings per share (in ) Diluted earning per share (in ) Basic earnings per share (in ) OSRAM (continuing operations) Diluted earning per share (in ) OSRAM (continuing operations)

31 Consolidated statement of financial position (preliminary, unaudited) Assets Current Assets As of As of March 31 September Cash and cash equivalents Available-for-sale financial assets 2 2 Trade receivables Other current financial assets Inventories Income tax receivables Other current assets Assets held for sale - 2 Total current assets 1,838 2,100 Goodwill Other intangible assets Property, plant and equipment 1,578 1,396 Investments accounted for using the equity method Other financial assets Deferred tax assets Other assets Total assets 4,102 4,238 As of As of March 31 September Liabilities and equity Current liabilities Short-term debt and current maturities of long-term debt Trade payables Other current financial liabilities Current provisions Income tax payables Other current liabilities Liabilities associated with assets classified as held for sale - 0 Total current liabilities 1,227 1,280 Long-term debt Pension plans and similar commitments Deferred tax liabilities 2 10 Provisions Other financial liabilities 9 10 Other liabilities Total liabilities 1,693 1,778 Equity Common stock, no par value Additional paid-in capital 2,032 2,035 Retained earnings Other components of equity Treasury shares, at cost Total equity attributable to shareholders of 2,399 2,452 Non-controlling interests 10 8 Total equity 2,409 2,460 Total liabilities and equity 4,102 4,238 31

32 Consolidated statement of cash flows (preliminary, unaudited) Cash flows from operating activities Three months ended March 31 Three months ended March Net income Adjustments to reconcile net income (loss) to cash provided Income (loss) from discontinued operation, net of tax 1 56 Amortization, depreciation, and impairments Income taxes Interest (income) expense, net 2 0 (Gains) losses on sales and disposals of businesses, intangible assets, and property, plant and equipment, net 0 2 (Income) loss from investments 3 0 Other non-cash (income) expenses 1 0 Change in current assets and liabilities (Increase) decrease in inventories (Increase) decrease in trade receivables (Increase) decrease in other current assets 11-7 Increase (decrease) in trade payables Increase (decrease) in current provisions 0 2 Increase (decrease) in other current liabilities Change in other assets and liabilities -5 2 Income taxes paid Interest received 1 3 Net cash provided by (used in) operating activities - OSRAM (continuing operations) Net cash provided by (used in) operating activities from discontinued operation Net cash provided by (used in) - OSRAM Licht Group (total) Three months ended March 31 Three months ended March Cash flows from investing activities Additions to intangible assets and property, plant and equipment Acquisitions, net of cash and cash equivalents acquired 0-10 Purchases of investments -1 0 Proceeds and payments from sales of investments, intangible assets, and property, plant and equipment 1 0 Proceeds and payments from the sale of business activities Net cash provided by (used in) investing activities from continuing operations Net cash provided by (used in) investing activities from discontinued operation -8 Net cash provided by (used in) investing activities - OSRAM (continuing operations) Cash flows from financing activities Purchase of treasury stock -67 Repayment of long-term debt -2-2 Change in debt and other financing activities -1-6 Interest paid -1-1 Dividends paid to shareholders of Dividends paid to non-controlling interests 0-3 Net cash provided by (used in) financing activities - OSRAM (continuing operations) Net cash provided by (used in) financing activities from discontinued operation -2 Net cash provided by (used in) financing activities - OSRAM Licht Group (total) Effect of exchange rates on cash and cash equivalents -1 2 Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at the end of period Cash and cash equivalents at end of period (consolidated statement of financial position)