War, China’s new COVID-19 lockdowns, and rising costs dampened first-quarter sales at ams Osram, where disposal of various Osram lighting units over the last year also contributed to a 3% revenue dip. Operating margin slipped, but profits rose by 38%.
Sales for the quarter ending March 31 tallied €1.25 billion, down from €1.28 billion in the same period last year. Operating margin dropped by a full percentage point, to 10.1% from 11.1% in 2021, but net income rose to €102 million from 2021’s €74 million — possibly a reflection of the Osram business unit sales.
The company said it is on track with its integration of Osram, noting it has now realized €200 million of the €350 million in savings it is targeting by March 2024 from integration measures including the disposals, job cuts, combined procurement, and general cost reductions. Ams acquired Munich-based Osram in July 2020.
Ams Osram previously reported in dollars but has now switched to euros, as it indicated it would do three months ago.
The Premstaetten, Austria company’s products include LED chips as well as other semiconductors, such as optical chips and sensors. It does not break out LED performance in its financial reporting. It has been selling off illumination and lighting components businesses, such as horticultural lighting company Fluence by Osram in a sale to Signify that closed this week.
In another recent disposal, it agreed in March to sell its finished headlamp operations to France’s Plastic Omnium.
Ams Osram continues to sell components and systems such as laser, sensors, multipixel LED light sources, and replacement lamps into the automotive market, which contributed to the majority of the company’s 2021 full-year revenue at 40%. The balance came from the industrial and medical markets (including horticultural) at 33% and the consumer market at 27%. Consumer has shrunk with the apparent loss of customer Apple, which previously bought ams chips for use in the iPhone.
Current events challenge quarterly expectations
In a web call with analysts this week, CEO Alexander Everke cited general world conditions including Russia’s invasion of Ukraine and ongoing supply-chain difficulties in issuing a tempered outlook for the next quarter. Chief financial officer Ingo Bank also noted that new COVID-19 lockdowns in China have caused the company to temporarily close a factory in that country.
Commenting on the supply chain, Everke noted that “we don’t expect the imbalance to be solved quickly.” He added,“The market environment in the automotive industry remains demanding and supply chain situations continue to be constrained and create ongoing volatility. This will continue to impact production volumes across regions.”
In an apparent reference to the loss of Apple and other difficulties in the phone market, he noted, “In addition we are currently experiencing a volatile development of demand in the consumer market.”
Everke said semiconductor sales would be flat in the second quarter.
CFO Bank indicated that semiconductors would rise slightly, while the lamps and systems unit would experience a typical seasonal decline.
“We also expect some downside impact in the lower double-digit million euro range,” Bank said. “This relates on the one hand to the Ukraine war, as we’ve discontinued our business activities in Russia and Belarus for the time being. In addition, we also expect some supply chain headwinds from the COVID-related lockdowns in China related to one of our lamps and systems manufacturing sites.”
CEO Everke reiterated previous long-term optimism, noting that the company is building a second LED plant in Kulim, Malaysia which will churn out micro LEDs and LEDs using 8-in. wafers — a step up from the 6-in. process it has been using. He sees a healthy future for LEDs and micro LEDs in displays, AR/VR, horticultural, UV-C, automotive, and other sectors.
The company continues to seek buyers for Osram’s Clay Paky entertainment lighting group, Digital Systems Eurasia group (which makes lighting electronics and LED drivers), and Traxon Technologies architectural and façade lighting business, although Everke left Traxon off the list when updating analysts during the web call.
Besides Fluence and headlamps, selloffs have also included illumination and smart lighting company Digital Lumens; Osram’s North American LED driver and light engine operations; and a lighting components factory in Plovdiv, Bulgaria.
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).
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