ams Osram has announced significant changes following the cancellation of a cornerstone MicroLED project, resulting in a comprehensive restructuring. This decision impacts around 500 employees and leads to a strategic refocus primarily on automotive LED applications, the company reported.
According to the latest financial update, ams Osram delivered Q1’24 revenue of EUR 847 million ($906 million), a 5% year-on-year increase, which aligns with the company’s adjusted EBITDA of EUR 124 million ($133 million(. Despite these gains, the company registered a substantial IFRS net loss of EUR 710 million ($760 million) in the quarter, heavily influenced by EUR 632 million ($616 million) in impairments and transformation costs linked to the MicroLED project discontinuation, directly attributable to Apple not pursuing MicroLED display development for its next generation of Apple Watch.
The restructuring involves scaling back the company’s MicroLED development to a minimum core dedicated to future automotive products such as high-pixelated forward lighting solutions. Remaining MicroLED activities will focus on applications that are crucial for the automotive sector, allowing ams Osram to potentially continue this line of development in a cash flow and EBIT neutral manner if new customer commitments arise.
In tandem with these developments, ams Osram is aiming to exit the Sale-and-Lease-Back (SLB) contract for its state-of-the-art Kulim 8-inch-wafer factory. This step is expected to reduce the company’s long-term debt by approximately EUR 400 million ($428 million) and is being pursued with high priority..
The company is also adjusting its non-core semiconductor portfolio, particularly the CMOS Imaging Sensors business. This segment will now focus more on medical and industrial applications, which are anticipated to be more profitable and sustainable in the long term.
The changes come as ams Osram forecasts second-quarter revenues to be between EUR 770 million and EUR 870 million ($824-931 million), reflecting the ongoing adjustments within the company and its market segments. CEO Aldo Kamper remarked on the industry dynamics, emphasizing the shift towards automotive LEDs and the company’s focus on its core businesses in automotive, industrial, medical, and selected consumer applications.
| Financial Metric (EUR) | Q1 2024 | Q4 2023 | QoQ Change | Q1 2023 | YoY Change |
|---|---|---|---|---|---|
| Revenues (EUR millions) | 847 | 908 | -7% | 927 | -9% |
| Operating Income (EBIT) adj. (EUR millions) 1 | 44 | 62 | -30% | 50 | -13% |
| Operating Margin (EBIT) adj. 1 | 5.2% | 6.9% | -170 bps | 5.4% | -20 bps |
| EBITDA adj. (EUR millions) | 124 | 150 | -17% | 151 | -18% |
| EBITDA Margin adj. | 14.6% | 16.5% | -190 bps | 16.3% | -170 bps |
| Net Result adj. (EUR millions) | -35 | -16 | +119% | 6 | -683% |
| Diluted EPS adj. (in EUR) 1,2 | -0.03 | -0.03 | 0% | 0.02 | -250% |
| Net Result (IFRS) (EUR millions) | -710 | -82 | +886% | -134 | +430% |
| Diluted EPS (IFRS, in EUR) | -0.72 | -0.18 | +294% | -0.51 | +39% |
| Operating Cash Flow 3 (EUR millions) | 55 | 34 | +62% | 141 | -61% |
| Cash Flow from CAPEX 4 (EUR millions) | -120 | -222 | +46% | -302 | -60% |
| FCF (incl. net interest paid) (EUR millions) | -60 | -125 | -56% | -159 | -65% |
| Net Debt (EUR millions) | 1,399 | 1,312 | +7% | 1,940 | -28% |
| Net Debt (incl. SLB) 5 (EUR millions) | 1,793 | 1,696 | +5% | 1,940 | -8% |
1. Adjusted (adj.) figures exclude specific non-operational effects to provide a clearer view of the underlying business performance.
2. EPS stands for Earnings Per Share.
3. Operating cash flow reflects the cash generated from operational activities.
4. CAPEX refers to Capital Expenditures.
5. SLB (Sale-and-Lease-Back) impacts are included in the adjusted net debt figures to provide a full scope of the financial liabilities.
| Financial Metric (USD) | Q1 2024 | Q4 2023 | QoQ Change | Q1 2023 | YoY Change |
|---|---|---|---|---|---|
| Revenues (USD millions) | 906 | 972 | -7% | 992 | -9% |
| Operating Income (EBIT) adj. (USD millions) | 47 | 66 | -30% | 54 | -13% |
| Operating Margin (EBIT) adj. | 5.2% | 6.9% | -170 bps | 5.4% | -20 bps |
| EBITDA adj. (USD millions) | 133 | 161 | -17% | 162 | -18% |
| EBITDA Margin adj. | 14.6% | 16.5% | -190 bps | 16.3% | -170 bps |
| Net Result adj. (USD millions) | -37 | -17 | +119% | 6.4 | -683% |
| Diluted EPS adj. (in USD) | -0.03 | -0.03 | 0% | 0.02 | -250% |
| Net Result (IFRS) (USD millions) | -760 | -88 | +886% | -143 | +430% |
| Diluted EPS (IFRS, in USD) | -0.77 | -0.19 | +294% | -0.55 | +39% |
| Operating Cash Flow (USD millions) | 59 | 36 | +62% | 151 | -61% |
| Cash Flow from CAPEX (USD millions) | -128 | -238 | +46% | -323 | -60% |
| FCF (incl. net interest paid) (USD millions) | -64 | -134 | -56% | -170 | -65% |
| Net Debt (USD millions) | 1,497 | 1,403 | +7% | 2,077 | -28% |
| Net Debt (incl. SLB) (USD millions) | 1,919 | 1,814 | +5% | 2,077 | -8% |
