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Osram manages to keep operating margin stable during 2020
Osram has come through the Year of Corona rather well thanks to early and efficient measures. “We acted early and consistently. We have protected both our employees and our production. This has paid off. Our free cash flow was positive in the last fiscal year at twelve million euros. We are particularly proud of this,” said Olaf Berlien, CEO of OSRAM Licht AG.
Despite a comparable revenue decline of almost 14%, the adjusted EBITDA margin remained stable at the previous year’s level of over 8%. The measures taken have all progressed as planned. The net result has been impacted by the fall in revenue due to the crisis, the planned costs for the transformation and for depreciation relating to the Osram Continental joint venture. However, the current trend in incoming orders for semiconductor business is positive.
The semiconductor business of the Opto Semiconductors (OS) unit contributed in particular to this development. The company says that streamlining of the product portfolio has had a positive impact here. Because of corona, revenue fell by around 9% to EUR 1.34 billion, whereas the adjusted EBITDA margin climbed to more than 20%.
Automotive business (AM) was more impacted by the economic effects of the pandemic. Revenue fell by 14% to EUR 1.59 billion. Adjusted EBITDA was around EUR 76 million. Adjusted EBITDA margin for the automotive segment as a whole was about 5%. This reflects dilution effects from Osram Continental. Its business is to be returned to the parent companies and is planned to be developed positively. Osram says that this will also significantly improve the profitability of the automotive segment.
The Digital (DI) unit was even worse affected, with revenue falling by one fifth to EUR 742 million. As a result, adjusted EBITDA was negative at minus EUR 28 million.
Encouraging developments in the fourth quarter
The two major business segments, Opto Semiconductors and Automotive, indicate improvements in the fourth quarter of the fiscal year. Profitability increased accordingly in both segments. The Opto Semiconductors unit even achieved an adjusted EBITDA margin of roughly 22%.
The company says that there was a noticeable upturn in the automotive market, which is an important one for Osram. Overall, the situation has improved significantly in the company's core markets in recent months.
For the 2021 fiscal year, Osram expects comparable revenue growth of between six and ten percent, an adjusted EBITDA margin of 9% to 11%, and free cash flow in the neutral to low positive double-digit million euro range. This forecast is based on the assumption that the effects of the COVID-19 pandemic will be overcome in the course of the fiscal year 2021.
