Q1 FY14 Management Presentation (preliminary figures) Solid start - - PowerPoint PPT Presentation

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Q1 FY14 Management Presentation

(preliminary figures) Solid start into FY14 Solid start into FY14

OSRAM Licht AG January 29, 2014

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

• n 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

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 2 2

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 forward- looking 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.

Group highlights Q1 FY14

Continued focus on profitable growth

€1,326m revenue (+2% comp.) 9.3% Adj. EBITA-margin1) (+140bps y-o-y)

OSRAM Push continues to deliver on plan

€105m benefits

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 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

OSRAM drives further expansion of SSL share

33% SSL revenue share (vs. 26% in Q1 FY13)

Outlook FY14 confirmed

Specialty Lighting (SP)

Growth in automotive outperforms global car production growth (light vehicles) since 16 quarters Introduced phaser module for laser-based projection in Display / Optics

Opto Semiconductors (OS)

Significant revenue growth and margin expansion y-o-y Construction of back-end facility Wuxi finalized, equipment roll-in in plan

Segment highlights Q1 FY14

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 4

Construction of back-end facility Wuxi finalized, equipment roll-in in plan Start of 6 inch wafer production for red and yellow LEDs

Lamps & Components (LC)

Focus on margin quality: +220bps adj. EBITA margin improvement y-o-y Strong SSL growth with LED lamps, light engines and drivers

Luminaires & Solutions (LS)

Transformation of LS business in execution; restructuring of Services in North America timely ahead of plan More than 40% of our Luminaires business is already SSL based

OSRAM Push: Overall, comprehensive, sustainable performance improvement program

OSRAM Push continues to deliver in plan

Operation Culture Structure Growth

EBITA Margin: >8% as average

OSRAM Push execution track record

As of FY13 Q1 FY14 Progress Target Transformation costs (€m) (FY12 – 14) 498 10 ≤ 600 Plant reductions (FY12 – 14) 7 11 Headcount reduction (‘000) (FY12 – 14) 6.6 3) 0.6 c.8.7 OSRAM Push gross

85% 64% 83%

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 5

3) Including impact of Tangerang (closure of production) Q1 FY14

OSRAM Push targets:

• Cum. gross savings of €1.2bn by FY15 unchanged
• Headcount reduction of 8,700 by FY14 unchanged
• Reduction of manufacturing sites unchanged
• OPEX targets unchanged:
• SG&A1): Reduce by ~8-10% by FY14 vs. FY12
• R&D: Keep absolute terms flat until FY14 vs. FY12

>8% as average

• ver the cycle

1) w/o logistics costs

Overview headcount development2)

OSRAM Push gross savings, cum. (€m) (FY13 – 15) 433 105 c.1,200

45%

• Cum. Q4/ FY13

34.1 35.1 39.2 41.4 OSRAM Group Segment OS Q1 FY14 7.8 FY13 7.6 FY12 FY11 6.4 6.5

2) FY data as of Sep. 30th, Q1 as of Dec 31st, data in thousands

Equipment roll in at Wuxi plant

1972: First assembly line for LEDs in Regensburg 1978: LED Back-end facility in Malaysia 2009: Setup of LED chip production site in Malaysia 2012: Groundbreaking

• f 2nd Back-end facility

in Wuxi 2001: Groundbreaking

• f new LED Front-end

facility in Regensburg Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 6

New Back-end facility Packaging of visible & IR LED chips R&D center for advanced packaging Sales and Marketing Application Centers Improve access to the Asia and Chinese lighting market Take part in government programs Create up to 2,150 jobs until 2017

Project Major Milestones

May 2012 Signing Investment contract with Wuxi New District Aug 2012 Ground breaking ceremony Oct 2012 Start civil works (after piling completed) Q1 FY14 Equipment roll in Q3 FY14 Expected start of production

Top-line growth following strong finish in FY13

Comments Q1 y-o-y Revenue development

Quarterly revenue

Comp. growth (%) Revenue (in €m)

Group (€m)

1,326 1,332 1,278 1,322 1,357

(1) 2 2 4

Comparable growth of 2%, held back by strong fiscal year-end finish Reported revenue held back by negative currency translation effects Transformation to SSL gains pace with +28% comparable growth of SSL revenue; total SSL share at 33%, up from 26% y-o-y APAC and EMEA: comp. growth mainly

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 7 growth (%)

1) Based on sum of Segments´ revenue, w/o considering corp. items & consolidation; nom. (nominal growth) / comp. (comparable growth, adjusted for FX and portfolio effects)

Growth (%) (1) (3) (3) (2) (2)

Q1 FY14 Q4 FY13 Q3 FY13 Q2 FY13 Q1 FY13

Revenue by Region1) Q1 Revenue by Segment1) Q1

EMEA

45%

Americas

31%

APAC

23%

• nom. 0%
• comp. 3%
• nom. (6%)
• comp. 0%
• nom. (2%)
• comp. 4%

Opto Semiconductors

19%

Specialty Lighting

26%

Luminaires & Solutions

9%

Lamps & Components

45%

• nom. 17%
• comp. 20%
• nom. (7%)
• comp. (2)%
• nom. 5%
• comp. 9%
• nom. (9)%
• comp. (6)%

(1)

APAC and EMEA: comp. growth mainly driven by OS and SP Americas: growth of most segments held back by declining services business

Broad based profitability increase

EBITA development

EBITA Margin (%)

Comments Q1 y-o-y Group (€m)

7.4 8.5 0.1 1.7 7.9 8.1 9.3 7.5 7.4

• Adj. EBITA

Margin1) (%)

• Adj. EBITA margin increased to 9.3% (+140 bps),

mainly supported by OSRAM Push and higher capacity utilization primarily at OS Continued gross margin improvement in SSL forward Special items nearly level with Q1 FY13 and

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 8

2013 2014 Q1 Q2 Q3 Q4 FY Q1 EBITA reported 100 1 22 (24) 99 112 therein: OSRAM Push transformation costs

• incl. personnel restructuring

(36) (90) (64) (110) (300) (10) Total Special items (7) (98) (72) (133) (310) (11)

Special items2)

EBITA (€m)

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

(1.8) 0.1

112

• 24

22 1 100 Q1 FY14 Q4 FY13 Q3 FY13 Q2 FY13 Q1 FY13

Special items nearly level with Q1 FY13 and impacted reported EBITA with €11m Profit before tax up 26.1% y-o-y; strong net income at €68.1m on prior year level

Lamps & Components: Strong profitability increase due to OSRAM Push benefits

Revenue and EBITA margin development

EBITA Margin (%)

Comments Q1 y-o-y

• Adj. EBITA

Margin1) (%)

668 695

0.2 (4.8) 6.3 (2.4) (1.3) 2.8 6.7 4.8 7.3 4.5

• Strong finish of FY13 results in a modest

decrease of revenue in Q1 FY14

• Successful launch of LEDr Classic family

led to sharp increase of SSL revenues

• Strong margin following weak profitability in

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 9 Revenue (€m)

Special items2)

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 3) Growth rates FY12 not available (due to change in segment structure as of FY13) Q1 FY13 Q1 FY14 EBITA reported 2 40 therein: Total Special items (29) (3)

643 633 604 668 695 Q1 FY13 Q1 FY14 Q4 FY13 Q3 FY13 Q2 FY13

Comp. growth (%) Growth (%) (8) (7) (7) (7) (5) (3) (2) (1) 2 (2)

• Strong margin following weak profitability in

Q4 2013, on the back of OSRAM Push as well as cost discipline; prior year quarter impacted by higher inventory write-downs

• Higher transformation costs expected in

coming quarters

Luminaires & Solutions: Transformation in execution

Revenue and EBITA margin development

EBITA Margin (%)

Comments Q1 y-o-y

• Adj. EBITA

Margin1) (%) (11.5) (11.2) (18.2) (18.0) (6.7) (8.0) (15.1) (16.5) (9.1)

Comparable revenue decline of 6%, mainly due to exit

• f

traditional maintenance business and product portfolio pruning at luminaires

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 10 Revenue (€m)

Special items2)

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 Q1 FY13 Q1 FY14 EBITA reported (17) (15) therein: Total Special items (4) (4)

135 155 131 128 148 Q1 FY14 Q4 FY13 Q3 FY13 Q2 FY13 Q1 FY13

Comp. growth (%) (41.7) Growth (%) 1 (9) (7) (8) (12) (14) (8) (6) 4 (6)

Slightly improved profitability despite expected top-line decline

Specialty Lighting: Top-line growth and high profitability

Revenue and EBITA margin development Comments Q1 y-o-y

EBITA Margin (%)

• Adj. EBITA

Margin1) (%) 12.4 15.5 19.1 15.7 13.0 16.4 16.0 15.8 16.3 19.9

Clear revenue growth of 9% on a comparable basis Automotive with double-digit comparable growth, driven by SSL business and benefitting from shorter plant holidays APAC and EMEA showing significant

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 11 Growth (%) 8 2 2 5 3

Q1 FY13 Q1 FY14 EBITA reported 69 60 therein: Total Special items (3) (2)

Special items2)

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

376 369 359 369 359 Q1 FY14 Q4 FY13 Q3 FY13 Q2 FY13 Q1 FY13

Revenue (€m) Comp. growth (%) 6 3 8 9 5

APAC and EMEA showing significant comparable growth rates, stable development in Americas with modest growth Strong 16.0% EBITA margin, however below exceptional prior year quarter mainly due to higher SSL share

Opto Semiconductors: Extraordinary top-line growth combined with operational performance

Revenue and EBITA margin development

EBITA Margin (%) 13.2

Comments Q1 y-o-y

279

9.8 14.6 10.2 13.5

Revenue growth of 20% on a comparable basis, all regions above prior year level; current quarter benefiting from shorter plant holidays in the automotive industry

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 12 Revenue (€m) Growth (%) 12 14 10 17 17

270 268 279 241 230 Q1 FY14 Q4 FY13 Q3 FY13 Q2 FY13 Q1 FY13

Comp. growth (%) 10 14 13 20 18

Reported EBITA

• f

€35.7m includes net expenses of €8.1m related to legal matters and a license agreement Favorable portfolio mix and improved capacity utilization keep EBITA margin on high level

Net Debt bridge Capital Expenditure

Continued increase in net liquidity due to strong FCF

Group (€m)

16 12

• 18%

Q1 14 33 6 1 7 7 Q1 13 40 1 1 15 7 Other L&S L&C OS SP

Net Liquidity Q1 FY14 246′

Other Invest./ Fin.

3′

CAPEX

33′

Other income / expense

3′

Mainly taxes paid

11′

∆ non- current assets

4′

∆ NWC

43′

EBITDA

166′ Net Liquidity FY13 172′ FCF 72‘

Net Debt bridge

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 13 Capex as % of revenue 2.5 Group WC Turns1) 4.3

Working Capital

1) Defined as revenue (last twelve months) divided by working capital

72 90

• 20%

Q1 FY14 Q1 FY13 Q1 14 Q1 13 979

• 115

Trade payables Trade receivables Inventories Q1 FY14 1,139

• 671

831 Q1 FY13 1,254

• 576

822 1,008 4.6

Free Cash Flow

3.0

Q1 FY14

Fin. activities expense paid assets and liabilities

FY13

Key financial metrics

Group (€m)

Q1 FY13 Q1 FY14 Change (y-o-y) Revenue 1,357 1,326 Nom: (2)% Comp: 2% Gross Margin 30.1% 32.4% 230bps R&D (88) (81) 7 SG&A (262) (238) 24 EBITA 100 112 12 EBITA Margin 7.4% 8.5% 110bps

• Adj. EBITA

108 123 15

• Adj. EBITA Margin

7.9% 9.3% 140bps

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 14

Financial result

(incl. at-equity results)

(19) (8) 11 Income before Taxes 77 97 20 Taxes (9) (29) (20) Net Income 68 68 Basic EPS (in €) 0.63 0.63 Free Cash Flow 90 72 (18) CAPEX (40) (33) 7 Employees (in thousands) 38 34 (4) Net Liquidity 246

• Adj. Net Debt / EBITDA

0.1 Equity Ratio 51%

• Comp. revenue growth FY14 expected to exceed global real GDP growth,

currently estimated at approximately 3% for 20141)

Despite the initiated restructuring within LS

We expect an adjusted2) EBITA margin of more than 8% in FY14 Cumulated gross cost savings of ~€1.2bn until FY15

OPEX targets remain unchanged

3 2 1

Outlook confirmed

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 15

OPEX targets remain unchanged Transformation costs for FY14 expected to approach €100m

Net income for FY14 expected to rise sharply ROCE for FY14 expected to exceed cost of capital of 8.5% Free Cash Flow for FY14 expected to come in with a positive triple-digit €m amount, however below the high FY13 level

Higher cash-out for transformation costs and CAPEX

3 4 5

1) Based on IHS Global Insight 2) Excl. impact from transformation costs, spin-off- / stand alone-related costs and substantial legal and regulatory matters

6

OSRAM’s transformation path

2014 2015

>8% EBITA as Ø over the cycle

Focus / Deliver Transform / Execute Transform / Execute

Continuous improvement process is

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 16

2011

Structure / People / Processes Focus / Prioritize

2012

Apr: New board members Jul: Start of restructuring Jul: Restructuring progress, further consolidation of manufacturing footprint and “OPEX” program started

2013

Q1: Top-line and bottom-line on plan

• Q2: Top-line bottomed out
• Q3: Back to profitable growth
• Q4: Majority of restructuring done
• Q1: Equipment roll in at Wuxi plant (OS backend facility)

Q2: New SSL products driving top-line growth Q3: Repositioning of LS shows first effects Q4: Transformation becomes part of operational business (“all in”) Continuous improvement process is part of OSRAM’s DNA

Financial Calendar and Investor contacts

Upcoming events January 30/31, 2014; February 5/6 2014 Q1 Roadshow February 4, 2014 HSBC SRI Konferenz, Frankfurt February 27, 2014 Annual General Meeting, Munich April 1, 2014 Capital Market Day at the L+B fair, Frankfurt April 30, 2014 Q2 preliminary figures

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 17

Investor Relations contact

• Mr. Boris Tramm

+ 49 89 6213 4686 Munich Office + 49 89 6213 4875 Internet http://www.osram.com/ir Email: ir@osram.com

Disclaimer

This presentation contains certain non-IFRS measures. FCF, EBITDA, EBITA, EBIT, EBITA margin, capital expenditures, capital expenditures as percentage of revenues and other operating income, net financial debt, net working capital and certain other items included herein are not recognized measures in accordance with IFRS and should not be considered as an alternative to the applicable IFRS measures. We have provided these measures and other information in this presentation because we believe they provide investors with additional information to measure our performance. Our use of the terms FCF, EBITDA, EBITA, EBIT, EBITA margin, capital expenditures, capital expenditures as percentage of revenues and other operating income, net financial debt, net working capital varies from others in our industry and should not be considered as an alternative to net income (loss), cash flows from operating activities, revenues or any other performance measures derived in accordance with IFRS as measures

• f operating performance or to cash flows as measures of liquidity. FCF, EBITDA, EBITA, EBIT, EBITA margin, capital

expenditures, capital expenditures as percentage of revenues and other operating income, net financial debt and net working

Management presentation Q1 FY14 (preliminary figures) | January 29, 2014 18

expenditures, capital expenditures as percentage of revenues and other operating income, net financial debt and net working capital have important limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our results as reported under IFRS. Certain numerical data, financial information and market data (including percentages) in this presentation have been rounded according to established commercial standards. As a result, the aggregate amounts (sum totals or interim totals or differences or if numbers are put in relation) in this presentation may not correspond in all cases to the amounts contained in the underlying (unrounded) figures appearing in the consolidated financial statements. Furthermore, in tables and charts, these rounded figures may not add up exactly to the totals contained in the respective tables and charts.