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28 January 2019

Osram’s December-quarter revenue down 15% year on year, with Opto Semiconductors down 16.9%

According to preliminary figures for fiscal first-quarter 2019 (to end-December 2018), Osram Licht AG of Munich, Germany says that revenue from continuing operations are €828m, down about 15% on €939m a year ago. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin is expected to be 11.3%, down from 18.5%.

This no longer include the business activities of Sylvania Lighting Solutions in the USA (which has already been sold) nor the European luminaire business (which is up for sale). Both are accounted for as discontinued operations from fiscal first-quarter 2019 onwards.

The weak operating performance is reflected in all three business units: Osram Opto Semiconductors (OS), Digital (DI), and Automotive (AM). For example, revenue for Regensburg-based Osram Opto Semiconductors is down 16.9%.

Osram had already previously issued two profit warnings last year. For fiscal 2018, it had forecast overall revenue growth of no more than 3% and an operating return on sales of 12-14% (down from 14.7% for 2017/18).

Osram attributes the “disappointing” revenue development to the accelerated market decline, especially in December. Particularly affected were the core markets of Automotive (weak demand from automobile manufacturers and their suppliers, especially in China), General Lighting, and Mobile Devices (a slump in the sales of smartphone makers, especially Apple and Samsung). Foremost among causes of the negative impact were the ongoing trade conflicts (between the USA and China), weak growth in China, and general political uncertainties. As a result, visibility for the quarters ahead will remain significantly low.

Osram’s managing board has therefore initiated a number of countermeasures, in particular to increase revenue. To maintain the firm’s guidance for the fiscal year, considerable structural measures have also been initiated in the Opto Semiconductors business unit. According to Bayerischer Rundfunk, this involves cutting 300 of the 2800 jobs in Regensburg by the end of September through voluntary redundancy (800 Regensburg staff had already been working 35 rather than 40 hours per week since the beginning of this year). The firm also wants to cut up to 240 temporary workers. Previously, over the past three years, Osram Opto Semiconductors’ staffing had been increased from 2000 to 2800, in response to rapid growth rates (of up to 24% annually).

Osram cautions that achievement of its financial guidance is also subject to a revival in order intake in the months ahead.

Full financial results for fiscal first-quarter 2019 will be issued on 7 February.

Tags:  Osram

Visit:  www.osram.com

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