On November 2, ams OSRAM announced its third quarter financial report. Despite the tougher market environment, ams OSRAM's revenue and operating profitability (adjusted) in the third quarter were in line with expectations, and adjusted net profit increased significantly by 365% year-on-year.
Specifically, Q3 achieved revenue of 1.21 billion euros (approximately RMB 8.69 billion), with revenue slightly increasing by 3% month-on-month and down 6% year-on-year. The adjusted gross profit margin was 29%, a decrease from both the previous quarter (32%) and the same period last year (34%). Adjusted EBIT was 91 million euros, and the adjusted EBIT margin was 8%, which also declined compared with the previous quarter (9%) and the same period last year (10%).
Q3 adjusted net profit was 47 million euros, compared with -54 million euros in the previous quarter, turning a loss into a profit, and compared with 10 million euros in the same period last year, a significant increase of 365%; unadjusted net profit was -370 million euros. Operating cash flow of €151 million and free cash flow of €5
6 million euros.
Looking at revenue by department, the semiconductor department’s Q3 revenue accounted for 67%, and the lighting and systems department accounted for 33%. The automobile-related businesses of both divisions were affected by factors such as weak demand in the global automobile market and supply chain disruptions, but their performance was in line with expectations.
It is worth noting that in the semiconductor business, ams OSRAM has successfully promoted the next-generation innovative lighting solution project for automotive platforms, and has also made important progress in the design of diversified automotive sensing applications. At the same time, due to the active global aftermarket, the automotive aftermarket business in the lighting and systems division performed well.
In addition, the performance of the semiconductor consumer application business was also in line with expectations, and the industrial and medical businesses also contributed solid revenue to the semiconductor sector. Among them, the shipment volume of differentiated LED and imaging solutions in important markets has remained at a high level, but the unfavorable conditions of the objective environment have been reflected in the demand of some industrial markets.
In the lighting and system business, the development of other traditional industrial, construction-related and medical application-related lighting and system businesses is in line with expectations. The main driving factor is end market demand.
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ams OSRAM said that end market supply chain inventories have been adjusted, especially in the automotive sector. Disruption in supply and demand continues to affect some end markets, including the impact of declines in global automobile production and smartphone shipments. In the future, the overall automobile market will maintain the current situation, that is, global automobile production is reduced, the automobile supply chain is uneven, and inventories will continue to be adjusted.
Despite unfavorable objective environmental conditions, the automotive, industrial and medical business performance during the quarter was solid, and the consumer business contributed significant revenue. With the active participation and support of customers, ams OSRAM's strategic development and Micro LED industrialization plan are advancing as scheduled, and the 8-inch LED factory is also under construction as planned.
At the same time, the group's integration plan is also progressing in an orderly manner. It is currently in the final stage of the disposal of non-strategic core assets. It is expected that the total income from asset disposal will exceed 550 million euros. It is looking forward to completing the last two signed transactions, one of which will be completed this quarter. It will also complete the disposal of the last smaller asset.
In view of continued cost inflation and relatively less optimistic end-
Macroeconomic environments such as end markets may have an impact on the group's mid-term business development, such as horticultural lighting, outdoor lighting or certain Android and non-smartphone consumer applications and other markets, ams OSRAM adjusts its mid-term target: Q4 revenue is expected to be 1.15-1.25 billion euros, basically the same month-on-month; the adjusted EBIT profit margin is estimated to be 6%-9%; the full-year revenue in 2024 is expected to be 4.7 billion euros (± 300 million euros), and the adjusted EBIT profit margin is 13% (±100 basis points) (compared to the same period last year, this estimate includes integration effects related to the disposal of assets).
It is also worth mentioning that in response to the current and short-term market conditions, ams OSRAM has implemented additional cost control measures, which are expected to reduce costs by approximately 100 million euros. In addition, based on the current market conditions, ams OSRAM has re-evaluated its investment plan for 2022, and the total annual expenditure has been reduced from 800 million euros to 600 million euros.
ANNA