Osram adjusts its annual forecast due to a weak market

This has led to significant inventory build ups, particularly in China. In addition, business development is facing an ongoing impact by the general economic slowdown. Geopolitical uncertainties continue to negatively impact demand. Osram previously had put its guidance under the condition that order intake would need to revive meaningfully in support of the second half of the fiscal year 2019. At this point in time such a development has not occurred, nor is it expected for the rest of the fiscal year, the company states in an update. According to figures available so far, the second quarter of fiscal 2019 is expected to see a revenue decline of roughly 15% on a comparable basis when compared to previous year, combined with an adjusted EBITDA margin in the mid to higher single digit range. Similar to the first fiscal quarter of 2019, the Opto Semiconductors business unit has been particularly affected by this business development, impacted by the underutilisation of its production capacities. In view of these developments, the Managing Board now expects for continued operations in fiscal 2019 a revenue decline between 11% and 14% (prior: revenue growth between 0% and 3%), an adjusted EBITDA margin between 8% and 10% (prior: between 12% and 14%) and a negative free cash flow between EUR 50 million and EUR 150 million (prior: positive free cash flow in the mid double-digit million range). The Managing Board has already pro-actively responded to the growing economic challenges in the past months. Through various initiatives the annual cost base is expected to be structurally reduced by more than EUR 200 million by fiscal year 2021.