OSRAM pushes on company transformation

Transcription

1 OSRAM pushes on company transformation Management Presentation (preliminary figures) OSRAM Licht AG July 29, 2014

2 Safe Harbor Statement This presentation may contain forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. Forward-looking statements may include, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. OSRAM Licht AG has based these forward-looking statements on its views and assumptions with respect to future events and financial performance. Actual financial performance could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. The information contained in this presentation is subject to change without notice and OSRAM Licht AG does not undertake any duty to update the forwardlooking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations. Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. 2 Management presentation (preliminary figures) July 29, 2014

3 Group highlights Modest topline decline LLS, SP and OS stay growth engines 1,203m revenue (-1% comp.) 8.6% Adj. EBITA margin 1) (+120bps y-o-y) OSRAM Push Wave 1 on track; targets for Wave 2 defined 118m Wave 1 benefits in 8th plant closed, remaining 3 plants in Americas for closure in Q4 announced, in implementation and on track Additional 260m cum. gross savings 2) from Wave 2 until FY17 Business Units CLB and LLS implemented, management fully in control : profit & loss reporting Q4 : full segment reporting Outlook confirmed Revenue expected on the last year's level, at best a modest revenue increase, on a comparable basis We expect an adjusted 1) EBITA margin of more than 8% in Profitability: EBITA margin of >8% as average over the cycle from FY15 3) 1) Adjusted for Special items - "Special items in this context include certain items, e.g. (personnel) restructuring costs, that will also occur in future periods 2) Expected cum. gross savings based on Wave 2 restructuring part 3) Depending on the implementation speed of the measures and the restructuring costs effect on earnings, the reported EBITA margin could be below this average value in FY15 3 Management presentation (preliminary figures) July 29, 2014

4 Segment highlights LED Lamps & Systems (LLS) Sharp growth rate of 68% (comparable) Break-even target LEDr lamps in FY15 on track Classic Lamps & Ballasts (CLB) Market shares in EMEA and Americas kept stable Pricing strategy with good results in selected markets Luminaires & Solutions (LS) Repositioning LS shows first effects trough in topline in passed LS in line with plan to break-even in FY15 Majority of Services lay-offs completed Specialty Lighting (SP) Strong growth in Automotive; Display/Optics growth trend continues OSRAM headlamp laser technology introduced with BMW / Audi Opto Semiconductors (OS) 9 quarters of growth (yoy) in a row, 5% growth in despite tough comps High operational performance driven by product mix and OSRAM Push Successful ramp-up of back-end facility Wuxi, start of first deliveries to customers 4 Management presentation (preliminary figures) July 29, 2014

5 Split of LC to address the need of different business models CLB - Classic Lamps & Ballasts Our focus / products Market (mid-term outlook) Our Goals Keep EBITA positive, pay its restructuring and return cash OSRAM Push Key measures OSRAM Operations Project OSRAM SG&A Project GI Sales Streamlining Thermal, CFLi, LPD, HPD Traditional ECGs (ex LE) Continuous strong decline Global Shared Services & Process Excellence Lean Headquarters (incl. logistics) LLS - LED Lamps & Systems Our focus / products LED Lamps, Spots and Tubes (ex LP) Light Management Systems Outdoor Systems / Indoor SSL-ECG Market (mid-term outlook) Ongoing double-digit growth prospects Our Goals Continue double digit growth Reach break even (LEDr lamps in FY15 on track) Key measures Benefitting from OSRAM SG&A project Innovation through efficient R&D, roadmapping and platform concept 4-Pillar strategy for manufacturing, purchasing, Quality & Supply Chain 5 Management presentation (preliminary figures) July 29, 2014

6 OSRAM Push Wave 1 continues to deliver on plan OSRAM Push: Overall, comprehensive, continuous performance improvement program EBITA Margin: >8% as average over the cycle OSRAM Push Wave 1 execution track record Transformation costs ( m) (FY12 14) Plant reductions (FY12 14) Headcount reduction ( 000) (FY12 14) OSRAM Push gross savings, cum. ( m) ( 15) As of FY 13 - cum. Progress Target % ~ % ) % c % c.1,200 OSRAM Push: Wave 2 initiated OSRAM Push Wave 1 targets: Cum. gross savings of 1.2bn by FY15 unchanged Headcount reduction of 8,700 by unchanged Reduction of manufacturing sites unchanged OPEX targets unchanged: SG&A 1) : Reduce by ~8-10% by vs. FY12 R&D: Keep absolute terms flat until vs. FY12 1) w/o logistics costs 2) Including impact of Tangerang (closure of production) Cum. Q4 6 Management presentation (preliminary figures) July 29, 2014

7 OSRAM Push Wave 2: restructuring part adapted to accelerated traditional GI market decline FY FY st wave ~ 1.2bn 2) Transformation: SG&A 0.45bn 1) ~ 0.6bn 1) Transformation: - Operations ~ 0.2bn 2) continued Transformation: Operations Organic growth continued Organic growth 2 nd wave Manufacturing footprint / Adapt to market situation New product platforms / Sales share of new products Details to come in Q4 GI Sales Streamlining / Global Shared Services & process excellence / Lean HQs ~ 0.26bn 2) Details to come in Q4 Operational performance ~ 1.0bn 2) continued Operational performance Purchasing optimization / Productivity improvements Details to come in Q4 Key targets Wave 2 Make the whole company leaner and more responsive Get closer to the customer (Delayer) Clear profit & loss and strengthen entrepreneurship of segments (Dematrix) Get affordable cost & right-sized back-pack Key data Wave 2 (restructuring part only) Cum. expected gross savings of ~ 0.260bn, FY15 - FY17 Headcount 3) reduction of ~ 7.800, FY15 - FY17 Thereof ~ within Germany Thereof ~ non-manufacturing Exp. transformation costs of ~ 0.450bn, FY15 - FY17 1) Gross expense 2) Gross savings 3) Full-time equivalent 7 Management presentation (preliminary figures) July 29, 2014

8 Modest revenue decline, Ongoing strong growth in SSL Group ( m) Revenue development 1) Quarterly revenue Revenue (in m) Comp. growth (%) Nom. Growth (%) 1,278 1,332 1,326 1,278 Q4 (2) (3) (2) (3) Revenue by Segment 2) ,203-1 (6) Comments y-o-y SSL share now 38%, up from 31% in the past year LLS sales with 68% comparable growth SP again with double digit comp. growth; OS shows moderate comp. growth on strong prior year quarter As communicated, decline of CLB business accelerated (-14% comp. y-o-y) Moderate revenue decline in Americas due to restructuring of Services Revenue by Region Opto Semiconductors comp. 5% nom. 2% 22% Specialty Lighting 29% comp. 10% nom. 5% 33% 8% 8% Luminaires & Solutions comp. (13)% nom. (16)% Classic Lamps & Ballasts comp. (14)% nom. (19)% LED Lamps & Systems comp. 68% nom. 60% Americas nom. (11)% comp. (4)% APAC 1) nom. (nominal growth) / comp. (comparable growth), adjusted for FX and portfolio effects 2) based on sum of Segments revenue, w/o considering corp. items & consolidation 32% 25% 43% nom. (8)% comp. (2)% EMEA nom. 0% comp. 2% 8 Management presentation (preliminary figures) July 29, 2014

9 Bottom line on track Group ( m) EBITA development Comments y-o-y Adj. EBITA Margin 1) (%) EBITA Margin (%) (1.8) EBITA well above prior year level; strongly supported by SP and OS and 118m of OSRAM Push benefits OS including a license income of 5m; other segments benefiting from pension settlement gain totaling 8m Currency headwinds more than offset pension settlement gain and license income Adjusted EBITA margin 8.6%, up 120bps Strong increase of net income including lower transformation costs EBITA ( m) Q4 Special items 2) Q4 FY EBITA reported 22 (24) therein: OSRAM Push transformation costs incl. personnel restructuring (64) (110) (300) (10) (34) (20) Total Special items (72) (133) (310) (11) (35) (23) 1) Adjusted for Special items 2) "Special items in this context include certain items, e.g. (personnel) restructuring costs, that will also occur in future periods 9 Management presentation (preliminary figures) July 29, 2014

10 Classic Lamps & Ballasts (CLB): Accelerated volume decline burdens profitability Revenue and EBITA margin development Comments y-o-y Adj. EBITA Margin 1) (%) EBITA Margin (%) Revenue ( m) (1.2) Accelerated revenue decline; professional and consumer channels affected by LED transition Volumes of halogen business substantially growing in Americas, profitability burdened by ramp-up costs Prices remain stable Margin pressure from cost progression, partly compensated by OSRAM Push benefits Comp. growth (%) (4) (5) (4) (2) Q4 (8) (8) Special items 2) EBITA reported therein: Total Special items Nom. (6) (10) (10) (11) (13) (13) (19) Growth (%) 1) Adjusted for Special Items 2) "Special items in this context include certain items, e.g. (personnel) restructuring costs, that will also occur in future periods (14) (37) (11) 10 Management presentation (preliminary figures) July 29, 2014

11 LED Lamps & Systems (LLS): SSL transition boosts revenue growth Revenue and EBITA margin development EBITA Margin (%) Revenue ( m) Comp. growth (%) (34.6) (27.7) 78 (38.5) (28.4) Q4 (25.7) (13.5) (20.3) Comments y-o-y Strong growth based on LED lamps, light engines and LED drivers in all regions with EMEA leading the way Price declines were more than compensated by productivity improvements and higher volume Continued EBITA margin improvement y-o-y despite ramp-up costs for new portfolio and major customer win Improvement y-o-y in sub-segment LED lamps on gross margin and EBITA margin level LLS Gross Margin LTM 1) (adj.) ~+300bps ~+400bps ~+500bps Nom. Growth (%) ) Last twelve months Q4 11 Management presentation (preliminary figures) July 29, 2014

12 Luminaires & Solutions (LS): Sequential growth after trough in prior quarter Revenue and EBITA margin development Comments y-o-y Adj. EBITA Margin 1) (%) EBITA Margin (%) Revenue ( m) (6.7) (8.0) (15.1) (11.2) (14.9) (18.0) (16.1) (24.7) (25.9) (41.7) Y-o-y top line decline due to exit of Service maintenance business and product portfolio adjustments at Luminaires Sharp growth of SSL business; SSL share at 48% Profitability improved q-o-q mainly due to improved product mix Restructuring well progressed Comp. growth (%) Nom. Growth (%) (6) 4 Q4 (6) (19) (13) (7) 1 (9) (21) (16) Special items 2) EBITA reported (23) (18) therein: Total Special items (4) (1) 1) Adjusted for Special Items 2) "Special items in this context include certain items, e.g. (personnel) restructuring costs, that will also occur in future periods 12 Management presentation (preliminary figures) July 29, 2014

13 Specialty Lighting (SP): Again double-digit top line growth Revenue and EBITA margin development Comments y-o-y Revenue growth with 10% (comp.), driven by automotive business Adj. EBITA Margin 1) (%) EBITA Margin (%) Substantial growth in SSL and continuous growth in traditional businesses Adjusted EBITA margin at 15.2% despite growing LED components business sourced from OS; slightly down q-o-q due to seasonality Revenue ( m) Comp. growth (%) 5 8 Q4 Nom. Growth (%) Special items 2) EBITA reported therein: Total Special items (12) (3) 1) Adjusted for Special items 2) "Special items in this context include certain items, e.g. (personnel) restructuring costs, that will also occur in future periods 13 Management presentation (preliminary figures) July 29, 2014

14 Opto Semiconductors (OS): New revenue high and outstanding profitability level Revenue and EBITA margin development Comments y-o-y Highest quarterly revenue with 286m; high prior year basis slows down y-o-y growth EBITA Margin (%) Positive influence of 5m from a license agreement On a like for like basis margin expansion due to favorable product mix, improved capacity utilization and strong operational performance Price declines were more than compensated by OSRAM Push benefits Revenue ( m) Comp. growth (%) Q4 Nom. Growth (%) Management presentation (preliminary figures) July 29, 2014

15 Reduced FCF due to higher CAPEX Group ( m) Capital Expenditure +37 SP OS LC 7 9 LS Other Capex as % of revenue Operating Working Capital Group WC -83 Net Debt bridge Δ NWC FCF 52 Net EBITDA Liquidity Δ noncurrent assets and liabilities Free Cash Flow 6 Mainly taxes paid 4 Other income / expense -77 CAPEX 2 Other Invest./ Fin. activities 420 Net Liquidity 1,243 1, Inventories Trade receivables Trade payables Turns 1) 1,010 1, ) Defined as revenue (last twelve months) divided by working capital 15 Management presentation (preliminary figures) July 29, 2014

16 Key financial metrics Group ( m) Change (y-o-y) Revenue 1,278 1,203 Nom: (6)% Comp: (1)% Gross Margin 27.7% 32.6 % 490bps R&D (82) (85) (3) SG&A (262) (236) 26 EBITDA EBITA EBITA Margin 1.7% 6.7% 500bps Adj. EBITA Adj. EBITA Margin 7.4% 8.6% 120bps Financial result (incl. at-equity results) 25 (8) (33) Income before Taxes Taxes (28) (23) 5 Net Income Basic EPS (in ) Free Cash Flow (56) CAPEX (40) (77) (37) Employees (in thousands) (1) Net Debt (Liquidity) (108) (420) (312) Adj. Net Debt (Liquidity) / EBITDA 0.7 (0.1) Equity Ratio 45% 53% 800bps 16 Management presentation (preliminary figures) July 29, 2014

17 Outlook confirmed Revenue expected on the last year's level, at best a modest revenue increase, on a comparable basis We expect an adjusted 1) EBITA margin of more than 8% in Cumulated gross cost savings of ~ 1.2bn until FY15 OPEX targets remain unchanged Transformation costs for expected to approach 100m Net income for expected to rise sharply ROCE for expected to exceed cost of capital of 8.5% Free Cash Flow for expected to come in with a positive triple-digit m amount, however below the high level Higher cash-out for transformation costs and CAPEX 1) Excl. special items, e.g. from transformation costs, spin-off- / stand-alone-related costs and substantial legal and regulatory matters 17 Management presentation (preliminary figures) July 29, 2014

18 OSRAM s transformation path Structure / People / Processes 2011 Focus / Prioritize 2012 Transform / Execute 2013 Transform / Execute 2014 Deliver 2015 : Top-line and bottom-line on plan : Top-line bottomed out : Back to profitable growth Q4: Majority of restructuring done >8% EBITA as Ø over the cycle : Equipment roll in at Wuxi plant (OS backend facility) : New SSL products driving top-line growth : Repositioning of LS shows first effects P Q4: Transformation becomes part of operational business ( all in ) P P Jul: Restructuring progress, further consolidation of manufacturing footprint and OPEX program started : SSL forward lamps break even : First dividend to shareholders to be proposed : Sales streamlining / new structure in full swing Q4: Continuous improvement process is part of OSRAM s DNA P Apr: New board members Jul: Start of restructuring 18 Management presentation (preliminary figures) July 29, 2014

19 Financial Calendar and Investor contacts Upcoming events July 31, 2014 Roadshow London August 1, 2014 Roadshow Paris August 11, 2014 Jefferies Industrials Conference, New York August 11, 2014 interim report August 12, 2014 Roadshow Toronto November 7, 2014 Q4 preliminary figures Investor Relations contact Mr. Boris Tramm Munich Office Internet ir@osram.com 19 Management presentation (preliminary figures) July 29, 2014