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Source: businesswire | Published on: Tuesday, 11 February 2025
PREMSTAETTEN, Austria & MUNICH, Germany--(BUSINESS WIRE)--ams OSRAM delivers cost savings ahead of plan, EUR 12m positive FCF in FY24, Q4 revenues and profitability above mid-point of guided range and expects FY25 - FCF exceeding EUR 100m
“Our turnaround is in full swing. Focusing on the core portfolio in our semiconductor business proves right. This semi core grew approx. 7% compared to 2023, driven by a strong rebound in sensors for mobile devices based on new product ramps and a resilient auto business. Savings from our ‘Re-establish the Base’ (RtB) strategic efficiency program are ahead of plan, measures supporting the upsized target are already detailed out. We delivered positive FCF in 2024 and expect margin expansion and a positive FCF exceeding EUR 100 million in 2025 even though markets remain volatile.” said Aldo Kamper, CEO of ams OSRAM.
Q4/24 financial update
Revenues stayed essentially flat at EUR 882 million quarter-over-quarter in Q4/24, above the midpoint of the guided range of EUR 810 – 910 million. Strong seasonal auto lamps aftermarket sales and steady semi automotive business compensated continued weakness in industrial & medical applications and the beginning seasonal decline in semiconductor products for consumer handheld devices. The stronger USD also helped coming in above the midpoint of the guided range.
Year-over-year, Group revenues declined by 3% due to cyclical weakness in automotive and I&M semiconductor businesses and some end-of-life of OEM modules business in Lamps & Systems. The relevant semi core portfolio (excluding the exited non-core portfolio) delivered a growth of approx. 7% year-over-year.
Adjusted EBITDA (adjusted earnings before interest, taxes, depreciation, and amortization) came in at EUR 150 million, i.e. at 17.0% adj. EBITDA margin, above the midpoint of the guided range of 15% - 18%.
Adjusted EBIT (adjusted earnings before interest and taxes) margin for the Group stood at 6.8%. Adjusted EBIT amounted to EUR 60 million.
Key reported figures
EUR millions | 2024 |
| 2023 |
| YoY | |
Revenues | 3,428 |
| 3,590 |
| -5 | % |
Opto Semiconductors (OS) | 1,448 |
| 1,386 |
| 5 | % |
CMOS Sensors & ASICs (CSA) | 981 |
| 1,039 |
| -6 | % |
Lamps & Systems (L&S) | 1,000 |
| 1,165 |
| -14 | % |
Gross profit adj. | 984 |
| 1,031 |
| -5 | % |
Gross margin adj. %1) | 28.7 | % | 28.7 | % | 0 bps | |
Operating profit adj.1) | 241 |
| 233 |
| 3 | % |
Operating margin adj. %1) | 7.0 | % | 6.5 | % | 50bps | |
EBITDA adj. | 575 |
| 604 |
| -5 | % |
EBITDA margin adj. % | 16.8 | % | 16.8 | % | 0 bps | |
Net profit adj.1) | 3 |
| 50 |
| -96 | % |
Diluted EPS adj.1)2) | 0.03 |
| 1.61 |
| -88 | % |
Net result (IFRS) | -785 |
| -1,613 |
| -51 | % |
Diluted EPS (IFRS) 2) | -7.94 |
| -52.0 |
| 85 | % |
Operating cash flow 3) | 435 |
| 493 |
| -12 | % |
Cash flow from CAPEX 4) | -502 |
| -1,049 |
| -52 | % |
Free cash flow (incl. interest paid) 5) | 12 |
| -332 |
| n/a |
|
Net debt | 1,413 |
| 1,312 |
| 8 | % |
Net debt (incl. SLB) 6) | 1,854 |
| 1,696 |
| 9 | % |
|
|
|
| |||
1) Excluding microLED strategy adaption expenses M&A-related, other transformation and share-based compensation costs, results from investments in associates and sale of businesses. | ||||||
2) Earnings per share are not comparable between the years due to the capital increase on 7 December 2023 whereby additional 724,154,662 shares were issued. Comparative figures were adjusted following the 10:1 reverse share split on 30 September 2024. Earnings per share in CHF were converted using the average currency exchange rate for the respective periods. | ||||||
3) From Q1 2024, operating CF includes net interest paid; 2023 figures reclassified for comparison. | ||||||
4) Cash flow from investments in property, plant, and equipment and intangibles (such as capitalized R&D), incl. Investment grants. | ||||||
5) Excl. financial investments. | ||||||
6) Incl. EUR 441m equivalent from SLB Malaysia transaction. | ||||||
Growth in the core-semiconductor portfolio
When launching its ‘Re-establish the Base’ program, the company identified a non-profitable, non-core semiconductor portfolio of approx. EUR 350 million in FY23 which was decided to be exited. During FY24, most of these product lines have been exited step by step, however, the accumulated revenues for the year still totaled approx. EUR 200 million, which had been mostly phased-out by end of December 2024. Taking this into account, the core semiconductor portfolio grew year-over-year approx. 7% - broadly in line with the growth target of the company’s target operating model.
Profitability
In 2024, the company switched its key profitability metrics to adj. EBITDA. For fiscal year 2024, adj. EBITDA came in at EUR 575 million after EUR 604 million, resulting in a stable adj. EBITDA margin of 16.8% for both years. The market weakness in automotive and I&M semis in the second half of 2024 offset improvements due to RtB, i.e. lower operating expenses and the gradual exit of non-profitable, non-core semi-portfolio, as well as customer payments for development and deconsolidation of L&S businesses.
Adjusted EBIT improved to EUR 241 million in FY24 after EUR 233 million in the previous fiscal year. In addition to the effects for the yoy development of adj. EBITDA, lower depreciation after impairment of manufacturing equipment improved adj. EBIT.
In FY24, adjusted diluted earnings per share stood at EUR 0.03 and EUR -7.94 unadjusted.
Free cash flow
In 2023, the Group reported free cash flow (incl. interest paid) of EUR -332 million driven by exceptionally high CAPEX levels associated with the microLED project. In 2024, this steeply improved coming in at a positive EUR 12 million despite significant transformation cost for the adjustment of the microLED strategy after the cancellation of the cornerstone project in February 2024. On top, the transformation costs for implementing the ‘Re-establish the Base’ program had to be borne. Key for the significant FCF improvement yoy were savings from the ‘Re-establish the Base’ program, customer pre-payments exemplifying the company’s leading technology position, and significantly reduced capital expenditures.
FY24 progress of ‘Re-establish the Base’ program
On 27 July 2023, the company announced its strategic efficiency program ‘Re-establish the Base’, which aimed at focusing the company on its profitable, structurally growing core, initially targeting approx. EUR 150 million run-rate savings by end of FY25 compared to FY23 actuals. On 7 November 2024, the company extended the program to 2026, upsizing the savings target to approx. EUR 225 million run-rate savings by end of 2026.
Until end-of-2024, the company has realized already approx. EUR 110 million savings, exceeding the EUR 75 million run-rate savings target for FY24. Recent implementation successes are especially evident when looking at the profitability improvement of the CSA segment. All measures to achieve the full savings have already been defined and will be fully implemented until end of 2026.
When it comes to the company’s non-core semiconductor portfolio (approx. EUR 350 million, in 2023, approx. EUR 200 million in 2024), it is mostly phased out by the end-of-2024. Thus, the exit is essentially complete with (a) the sale of assets of the Passive Optical Components business to Focuslight Inc. (2) the restructuring of the CMOS image sensor business, and (3) the end-of-life phase out of the remaining product-lines.
Summary of transformation costs
The company excludes transformation costs amongst other items from its operational performance measures, i.e. adj. EBITDA and adj. EBIT. Transformation costs in FY24 were mainly driven by the adjustment of its microLED strategy and its ‘Re-establish the Base’ program.
In Q4/24, the company recorded a net gain of approx. EUR 29 million by reversing certain provisions related to the microLED strategy adaption. In summary, total cost for adjusting the microLED strategy came in at EUR 576 million in FY24, significantly lower than initially expected. Within that number, there were impairment charges of EUR 490 million and transformation costs of EUR 86 million.
Transformation costs related to ’Re-establish the Base’ were approx. EUR 18 million in Q4/24. For FY24, the total amount came in with EUR 37 million.
FY24 Strong Design-Win performance in Fiscal Year
The company continues to win meaningfully new business across a wide customer base underpinning its structural growth targets in its core semiconductor business. The combined figure came in close to EUR 5 billion, supported by wins across all segments of its core semiconductor portfolio. The largest contribution came from automotive.
First quarter 2025 Outlook
The company expects muted demand for its automotive semiconductor products in Q1/25 reflecting the persisting uncertainties and corrections in the global automotive supply chain. The demand from industrial and medical markets also remains muted, although first small signals might indicate that the weakness has reached its bottom. The business with its semiconductor products for consumer handheld devices will go into its typical strong seasonal decline.
Looking at the L&S segment, the automotive aftermarket halogen lamps business will come in slightly lower – in line with its typical, seasonal demand pattern.
As a result, the Group expects first quarter revenues to land in a range of EUR 750 – 850 million. In line with fall-through and further savings from the ‘Re-establish the Base’ program coming into effect, the company expects adj. EBITDA to come in at 16% +/-1.5%. The EUR/USD exchange rate is assumed to be 1.05.
FY 2025 commentary
The company expects a meaningfully stronger second half mainly due to product ramps and to some extent, market normalization. Furthermore, the company expects improving profitability driven by its ‘Re-establish the Base’ program even in case of moderate revenue development, CAPEX spendings of less than 8% of sales (including capitalized R&D and expected investment grants, e.g. from the European Chips Act), and a positive free cash flow (incl. net interest paid) exceeding EUR 100 million due to improved earnings, lower CAPEX and similar operating NWC in FY25.
Additional Information
Additional financial information for the fourth quarter 2024 is available on the company website. The fourth quarter 2024 investor presentation incl. detailed information is also available on the company website.
ams OSRAM will host a press call as well as a conference call for analysts and investors on the fourth quarter and full-year 2024 results on Tuesday, 11 February 2025. The conference call for analysts and investors will start at 9.45 am CET and can be joined via webcast. The annual press conference and call will take place at 11.00 am CET. Journalists who would like to join the press conference in person or the call can reach out to press@ams-osram.com or investor@ams-osram.com for further information.
