Year-end financial numbers won't be quite as bad as Osram warned in June, as August brought a “stronger business recovery” than anticipated, the company said this week.
Mirroring the general pandemic economy, however, results will still be well down for the fiscal year 2020, which ends on Sept. 30.
“Osram now expects a comparable revenue decline of approximately 14 percent,” the company said in what it calls an “ad hoc” financial statement.
In ordinary times, such an outlook might spook the investment community. But amid the COVID-19 global health crisis, it marks an improvement over Osram's warning in June that revenue would decline by 15–19%.
Margins will also be better than expected, with adjusted EBITDA now forecast at “approximately 8 percent” compared to June's 3–6%.
In another upturn, Osram indicated that it has righted its cash-flow ship, as it now expects to report “a balanced free cash flow.” In June, it warned of a possible €100 million-plus gobbling up of its cash.
“The managing board of Osram Licht AG raised the guidance for the fiscal year 2020 today due to stronger business recovery in summer, in particular in August,” the company said this week.
It noted that the improvements came primarily in its Opto Semiconductors (OS) and Automotive (AM) units, “supported by improved business conditions in its core markets in China and the US.”
An Osram spokesperson elaborated for LEDs Magazine that “recovery in China was quite fast,” and also noted that automotive sales in the US was not as hard hit as originally anticipated in June.
Osram also cited “the consistent implementation of measures taken to moderate the impact of the COVID-19 pandemic” as a contributing factor in the positive trend. Those measures have included work-hour reductions and other actions. Osram also had a job reduction program in place prior to the coronavirus outbreak.
OS makes optical chips including LEDs and lasers for a wide variety of uses such as general lighting, health monitoring, autonomous vehicles, facial recognition, augmented and virtual reality, and many other digital applications. They are a logical fit with the mission of Osram's new owner ams, an Austrian sensor maker.
Automotive produces headlights, lamps, light modules, and sensors for auto makers
Notably, the company did not single out its digital operations in citing improvements. Digital includes, among other areas, smart Internet-connected lighting for commercial and industrial buildings. That business area was already a challenging one for the lighting industry in general. Its future in a post-pandemic world where employees might not return to conventional workplaces is anyone's guess, as Signify CEO Eric Rondolat indicated recently.
Osram declined to reveal to LEDs whether the sale of ultraviolet C-band (UV-C) lamps for disinfection of the virus that causes COVID-19 played a role in the improved business outlook.
“We do not disclose any figures on a technology level, but you can assume that the development in Q4 is based on Automotive and OS technology,” the spokesperson said.
Osram in June announced a big ramp up of UV-C lamps based on conventional mercury vapor technology. Signify has also ramped up conventional UV-C production. CEO Rondolat has said sales have been lively, but he has so far declined to quantify them.
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).
For up-to-the-minute LED and SSL updates, why not follow us on Twitter? You’ll find curated content and commentary, as well as information on industry events, webcasts, and surveys on our LinkedIn Company Page and our Facebook page.