ams OSRAM Posts Solid Q2 Results at the Midpoint of the Guidance Despite Currency Headwinds and Executes First Steps of Its Accelerated Deleveraging Plan

Business Wire

5 days ago

PREMSTAETTEN, Austria & MUNICH--(BUSINESS WIRE)-- ams OSRAM delivers 18.8 % adj. EBITDA at revenues of EUR 775 m in Q2, confirms 2025 FCF outlook above EUR 100 m and executes first steps of its accelerated deleveraging plan
'We showed a solid performance in Q2 in a still difficult market with good profitability on the back of rapid implementation of 'Re-establish-the Base' and preproduction for the second half, as well as a very good design-win momentum securing future semiconductor business. We continue to expect a stronger second half although the weaker US Dollar weighs on topline results and tariffs discussions instigate continuously uncertainty.' said Aldo Kamper, CEO of ams OSRAM.
' Our plan to accelerate our balance sheet deleveraging is unfolding. The extension of the Revolving Credit Facility, the private placements of additional 2029 senior notes to prefinance long-term any bulk exercises of OSRAM minority put options and to re-purchase 2027 convertible bonds, but especially the first disposal for reducing leverage show that we keep track in executing our finance milestones as well.' said Rainer Irle, CFO of ams OSRAM.
Q2/25 business and earnings summary
1) Adjusted for microLED strategy adaption expenses, M&A-related, other transformation and share-based compensation costs, results from investments in associates and sale of businesses.
2) Basic and diluted earnings per share for the comparative period were adjusted following the reverse share split on 30 September 2024.
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Group revenues came in exactly at the midpoint of the guided range of EUR 725 – 825 million. Reported revenues declined by 5 % quarter-over-quarter due to a meaningful automotive-lamps aftermarket inventory correction at US retail chains on top of normal seasonality and a significantly weaker USD. At a constant EUR/USD exchange rate, revenues would have been approx. EUR 35 million higher.
Year-over-year, group revenues declined by 5% mainly driven by the weaker US dollar, the discontinued non-core semiconductor business and the inventory correction in automotive LEDs. Like-for-like, at a constant EUR/USD exchange rate and only considering the core portfolio, revenues would have been up by approx. 2 %.
Adj. EBITDA (adjusted earnings before interest, taxes, depreciation, and amortization) came in slightly higher than the midpoint of the guided range of 18.5 % +/-1.5 %. Some one-offs (part of the Q2 guidance), such as government and customer funding catch-up, contributed positively.
Adj. net result came in positive at EUR 18 million. The typical, recurring quarterly adjustments of transformation cost, purchase price allocation and share based compensations were reduced by a one-time positive effect from the settlement of a decades long lawsuit regarding the misappropriation of trade secrets by a counterparty.
IFRS net result came in slightly positive at EUR 1 million.
Implementation of balance sheet improvement plan
On 30 April 2025, the company announced its accelerated, comprehensive plan to de-leverage its balance sheet including assessing the sale of business assets for well above EUR 500 million.
To date, the company has implemented the first elements of the plan, namely
03 July 2025, extension of the EUR 800 m Revolving Credit Facility (RCF) by another year until September 2027
23 July 2025, private placement above par of principal amount of EUR 200 m 10.5 % and USD 350m 12.25 % senior notes due in 2029 to prefinance long-term OSRAM minority put option bulk exercises (approx. EUR 350m) and buy back 2027 convertible bonds (approx. EUR 150m)
29 July 2025, sale of Entertainment & Industrial Lamps business for EUR 114 m (on a cash-and-debt-free basis) as first disposal under the deleveraging plan, closing expected in Q1/2026
Upon completion, the plan will reduce the net-debt / adj. EBITDA leverage ratio below 2, minimize the amount to be refinanced, reduce the interest expenses to below EUR 100 million annually and thereby strengthen the operating cash flow further.
Q2/25 Cash generation & balance sheet update
1) contingent liability part of 'other financial liabilities'
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Free cash flow – defined as operating cash flow including net interest paid minus cash flow from CAPEX plus proceeds from divestments – came in slightly negative as the company preproduced inventory for the scheduled business ramp-up in H2 and also paid out annually recurring items. However, the company expects meaningful cash inflows from subsidies by the Austrian government under the European Chips Act already notified by the European Commission later in the year.
The net debt position slightly increased to EUR 1,570 million quarter-over-quarter after EUR 1,484 million in the previous quarter, mainly due to a change in the cash-on-hand position. In view of approx. EUR 60 million exercised put options of OSRAM minority shares in H1, the company drew EUR 50 m of the RCF (that is in place for larger put option exercises) in order to keep an adequate cash balance. By now, the drawn RCF portion has already been paid back using some proceeds of the private placement of additional senior notes on 23 July 2025.
The equivalent value of the Sale-and-Lease Back (SLB) Malaysia transaction decreased by EUR 9 million due to a net effect of quarterly accrued interest and MYR exchange rate swings.
The Group held approx. 88 % of OSRAM Licht AG shares end of Q2/25. The company has an EUR 800 million Revolving Credit Facility (RCF) in place that was just extended by another year until September 2027. The RCF is primarily in place to cover any further significant exercises under the 'domination and profit and loss transfer agreement (DPLTA)' put option and the undrawn part would be sufficient to fully cover all outstanding minority shareholder's put options. It can also be drawn for general corporate and working capital purposes.
Semiconductor Business
Semis were approx. 76 % of Q2/25 group revenue or EUR 582 million, compared to EUR 596 million a year ago, mainly driven by inventory correction in the automotive LED supply chain and the phase-out of non-core businesses in conjunction with 'Re-establish the Base' contributing with a close to mid double-digit million EUR a year ago. Growth in the core portfolio, especially with new sensor products, made up for the divested or discontinued non-core portfolio. Like-for-like, at a constant EUR/USD exchange rate and only considering the core portfolio, revenues would have been up by approx. 7 % - in line with the mid-term target growth corridor of the semiconductor target operating model.
Optical Semiconductors (OS)
A seasonal upswing in horticulture and slightly increased sales in Automotive led the quarter-over-quarter improvement.
Adj. EBITDA increased to EUR 79 million compared to Q1 on the back of gross profit fall through, EUR/USD exchange rate effects and catch-up from government and customer fundings.
CMOS Sensors & ASICs (CSA):
Revenues remained essentially flat quarter-over-quarter. Demand for components for consumer handheld devices was slightly stronger than the typical seasonal trend and sales into industrial & medical applications improved.
Adjusted EBITDA improved by EUR 10 million in Q2/25 compared to the previous quarter driven by an improved factory loading in anticipation of product ramp-ups in H2/25. The adjusted EBITDA Margin came in almost twice as high than a year ago thanks again to the structural savings from the 'Re-establish the Base' program.
Semiconductors industry dynamics
Automotive:
Business improved quarter-over-quarter against the backdrop of an inventory correction in the LED semiconductor supply. During the quarter, book-to-bill ratio remained above 1. Year-over-year, auto revenues came in 9 % lower, showing the inventory adjustments in opto-electronic products due to demand uncertainties seen by Tier-1 and OEM customers.
Industrial & Medical (I&M):
End-markets started to show some momentum resulting in 21 % quarter-over-quarter improvement in the I&M business, led by typical seasonal upswings in various verticals, such as horticulture. The professional lighting end-market was also resilient helped by consolidation trends that allow the company to win market share. Industrial automation is still on a low level and the mass market showed a regionally differing performance with Europe and Americas improving. In medical first signs of a gradually improving ordering pattern are visible.
Consumer:
Demand for new products and for consumer portable devices in general remained resilient in view of the typical seasonal decline in every second calendar quarter of a year.
Year-over-year, revenues increased by a strong 15 % due to a strong contribution of new products, despite a lower double-digit million contribution from non-core products a year ago that were phased-out by December 2024.
Lamps & Systems Business (traditional auto & industrial lamps)
Lamps & Systems represented approx. 24 % of Q2/25 revenues. The significant quarter-over-quarter and year-over-year step down was primarily driven by an inventory adjustment at US aftermarket retail chains. Some weakness in the European market and the weaker US dollar against the Euro also contributed.
Revenues in Specialty Lamps slightly declined quarter-over-quarter in line with normal seasonal trends.
Adj. EBITDA dropped in line with factory utilization and product mix with the backdrop of an elevated figure in the first quarter as a result of one-time effects.
Guidance for the third quarter 2025
The company expects for its semiconductor business:
Automotive: improved demand on the back of market normalization (likely end of the LED inventory correction) and new business ramp-ups.
Industrial and medical: modest development as green shoots seen at end-customer's business needs to translate into normalized inventory levels.
Consumer: typical strong upswing in the seasonally strongest quarter.
Combined, the semiconductor business is expected to follow its typical pattern with a strong third quarter slightly weaker than a year ago due to the weaker USD.
The company expects for its traditional auto lamps business that the sales into the aftermarket channel will improve with the annual 'lighting season' beginning end of the summer.
As a result, the Group expects third quarter revenues to land in a range of EUR 790 – 890 million assuming a EUR/USD exchange rate of 1.16. The impact of the weaker USD on revenues compared to the start of the year is of the order of mid-double digit million Euro. Quarter-over-quarter the impact is approx. EUR 15 million.
The company expects adj. EBITDA to come in at 19.5 % +/-1.5 % on the back of seamless execution ahead of plan of its Re-establish the Base strategic efficiency program.
FY 2025 commentary
The company expects a stronger second half mainly due to product ramp-ups and seasonality. Uncertainties persist in view of potential impacts to global car production, smartphone sales, or other impact to GDP, following the recent introduction or announcement of elevated tariffs in the US and in particular changes in the EUR/USD exchange rate.
The company expects improving profitability driven by its 'Re-establish the Base' program even in case of lower predictability of its topline. CAPEX is expected to land below 8 % of sales(including capitalized R&D and expected investment grants, e.g. from the European Chips Act).
The company expects positive free cash flow (incl. net interest paid) exceeding EUR 100 million.
Additional Information
Additional financial information for the second quarter 2025 is available on the company website. The second quarter 2025 investor presentation incl. detailed information is also available on the company website.
ams OSRAM will host a press call as well as a conference call for analysts and investors on the second quarter 2025 results on Thursday, 31 July 2025. The conference call for analysts and investors will start at 9.45 am CET and can be joined via webcast. The conference call for journalists will take place at 11.00 am CET.