14 May 2020
Firm adjusts to counter Covid-19 impact, making structural changes with short-time working to cost-cuts.Osram has reported what it called “a good second quarter [of 2020] given the global challenges and thus we have met the market's expectations.” Although company revenue fell by almost 8 percent to €821 million compared with the same quarter of 2019, a positive free cash flow of €64 million was achieved by “targeted cash management.” The adjusted pre-tax earnings (EBITDA) margin improved by almost 4 percent year-on-year to 11.7 percent.
As a result of the company making structural measures and the conversion to IFRS 16 taxation, adjusted pre-tax earnings were about a third higher than in the previous year at €96 million. Due to restructuring costs of €45 million, mainly for charges for the structural and personnel adjustments, the net result was negative at €39.3 million, the company stated. Full figures are available on the Osram Group website.
Olaf Berlien, CEO of Osram, commented, “The measures we took very early on to counter the consequences of the Covid-19 crisis are having an effect throughout the company. It has been a challenge to maintain production largely on a regular basis in recent weeks, as our top priority is and remains the health and protection of our employees. Osram is also using the time to be well-positioned after the Corona crisis. Our high equity ratio is of great benefit to us.”
As part of company-wide crisis management, an additional liquidity volume of around €200 million was identified until the end of the fiscal year through working time measures, the review of investments and consistent financing management, among other things, Berlien added. Osram is sticking to its existing performance programs, which are expected to achieve savings of €300 million from 2018 until the end of fiscal year 2022.
In the medium and long term, the effects of Covid-19 on the global economy cannot yet be predicted, the company cautioned. “The situation is accompanied by operational and financial challenges for the entire economy. In particular, production shutdowns on the part of customers and disruptions in global supply chains are very likely to affect Osram's business development.”
As already announced in mid-March, the company therefore expects not to be able to achieve its original corporate targets for the 2020 financial year. Osram will only be able to update its forecast when the general market situation allows more clarity.
Management takes pay cut in May
Starting in May, 2020, a larger number of Osram employees are being affected by short-time working. Osram’s Managing Board said in the latest financial statement, of May 12th, that has it therefore decided to waive 10 percent of its May salary as well. It will decide on further measures according to the current situation. The statement added, “Managers also will make a corresponding solidarity contribution through their variable income components.”
Osram OS Synios S 2222 range of LEDs is suitable for architectural lighting.
The cause for this is, among other things, “the initial effects of the Covid-19 crisis on the automotive industry, which was already weakened before the corona crisis. Revenues in the company's Digital (DI) business unit also fell significantly by about 12 percent.
“Here, the pandemic-related decline in the entertainment and cinema lighting business and in building illumination projects in China became noticeable. The DI division maintained its operating profitability, with adjusted EBITDA positive at €2 million.”
Osram OS has launched the Synios S 2222 range of LEDs, designed for applications from customized lighting for electronic devices, ambient lighting for transport, to architectural lighting. The LED suits a variety of low- and mid-power applications (from 10 mA to 200 mA). Customers can choose from six colors and combine them to create more: white, blue, green, yellow, red and deep red. Unit dimensions are 2.2 x 2.2 x 0.6 mm, enabling flat lighting solutions.