When a minnow swallows a whale, expect some indigestion. Ams Osram has suffered a long bout of it, starting when ams launched its arduous and eventually successful quest to acquire Osram — a company then four times it size — in the summer of 2019. The agita has persisted all along.
Today, new CEO Aldo Kamper prescribed a giant antacid tablet intended to help stop the pain, felt acutely this morning as ams Osram reported an unadjusted second quarter loss of €1.3 billion ($1.4 billion), although adjusted numbers were far better.
Kamper, a former Osram executive who returned to ams Osram as top boss on April 1, announced an impairment charge — a write-down — of the same €1.3 billion size. He also revealed a restructuring that boots out the two remaining ams-linked executives from the top management office, and said the company is indeed now shedding some ams lines, a move he flagged a quarter ago.
“Our recent performance has been lackluster, and has not met our ambition,” Kamper stated on a call with analysts to discuss results for the quarter ending June 30, and to spell out the significant measures he is taking to remedy the situation.
Revenues fell 28% to €851 million ($938 million) from €1.12 billion in the same quarter a year ago. Although the company showed a “net result” (profit) of €31 million ($34 million) on an adjusted basis, the non-adjusted version tells a staggeringly different story of a €1.3 billion “net result,” the company said in a press release. The adjusted net result in the second quarter last year was a loss of €54 million.
On the restructuring side, Kamper, the ex-Osramite, continued his re-Osramification of the company as he is removing chief technology officer Thomas Stockmeier and chief business development officer Mark Hamersma from the management board, by virtue of striking their jobs from the board.
The Premstaetten, Austria–based company did not say whether Stockmeier and Hamersma and their jobs will remain at the firm. As of January, they will not be on the top board, which will include only CEO Kamper and new chief financial officer, Rainer Irle, who started on July 3 as a Kamper hire.
Both Stockmeier and Hamersma have been in the ams orbit since before the Osram acquisition, which won regulatory approval in July 2020. Former CEO Alexander Everke and CFO Ingo Bank left earlier this year.
The restructuring includes eliminating some lines from the broad portfolio of ams sensors and optical chips.
“We are a high-tech company with great ideas, but we need to put monetizing these innovations more at the center of our thinking,” Kamper told analysts on the call.
He said more details would follow on the shrinking of the offerings.
“The company is refocusing its semiconductor portfolio on its profitable core in differentiated, intelligent sensor and emitter components,” ams Osram said in its press release. “The non-core and lower performing portfolio with revenues of around €300 to €400 million — including amongst others, passive optical components — will be exited.”
Kamper calls the restructuring program “Re-establish the Base.” As part of it, the company is turning its semiconductor group into one with two rather than three divisions, effective Jan. 1. One of the two will handle emitters (LEDs and lasers) and the other will handle “analog mixed signal ICs,” the company said. Until Jan. 1, the three semiconductor divisions will continue to be Opto Semiconductors, Advanced Optical Sensing, and Image Sensing Solutions.
The company also remains committed to its Lamps & Systems Segment, which oversees automobile replacement lamps including halogen and LED, and specialty lighting such as for entertainment.
Within semiconductors, both Kamper and CFO Irle were resolute about the ongoing commitment to the all-important Kulim, Malaysia micro LED plant, which is still under construction and is expected to start making micro LEDs that contribute to ams Osram revenue in 2025.
“It remains a significant element in our growth plan,” Kamper told analysts. “We are well on track to setting up the factory operationally. Our micro LED effort is the centerpiece when it comes to monetizing innovation. It’s the biggest investment in the history of the company. We’re determined to make it successful and financially rewarding.”
CFO Irle echoed that. In explaining why capital expenditure would not yet come down to a previously stated goal, he told one analyst, “We have to continue the big investment in Malaysia, which is very important. It’s a one-of-a-kind thing in the industry.”
For the quarter, EBIT margins were 5.9%, down from 8.8% a year ago, but the company noted the 5.9% was at the upper end of its guidance.
Ams Osram provided some insights on other LED products today. LEDs Magazine hopes to report on these separately.
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).