Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Q3 group revenues increased by 8% quarter-over-quarter, reaching EUR881 million, driven by the semiconductor business and new product ramps.
- Adjusted EBITDA improved significantly, reaching 19% or EUR166 million, a 23% increase from the previous quarter.
- The company achieved strong free cash flow of EUR188 million, supported by customer prepayments and NREs.
- ams-OSRAM AG (AUKUF, Financial) is ahead of schedule in implementing its Re-establish the Base program, realizing EUR85 million in structural run rate savings.
- The company reported significant new design-wins, with a year-to-date lifetime value of EUR3.5 billion, indicating strong customer trust and future growth potential.
Negative Points
- Group revenue decreased slightly by 2% compared to a year ago on a constant currency basis.
- The automotive segment experienced a 7% decline in revenues compared to the previous quarter, reflecting market weakness.
- The Specialty Lamps business for industrial entertainment applications has not yet seen a market recovery.
- Visibility in key markets is worsening, with increased uncertainty about the timing of cyclical recovery.
- The process of selling the 8" factory in Malaysia is delayed due to the semiconductor cycle, affecting potential divestment plans.
Q & A Highlights
Q: Can we expect further savings in Q4 from the cost-saving program, and how will the remaining savings be phased?
A: We will continue to deliver on the plan and are ahead of schedule. Further savings will be seen in Q4, and the new program will accelerate savings beyond the original EUR150 million target by the end of next year. Significant savings will be realized in 2025, with additional savings in 2026 due to transfers and restructuring efforts.
Q: Can you provide more details on the Sale-and-Lease Back process and its timeline?
A: The process is ongoing, but challenging due to market cyclicality. We are in active discussions with several parties, but it's difficult to predict when it will conclude.
Q: What is the current inventory situation in the automotive and industrial markets?
A: Overall, inventory levels are reasonable, with no overstocking in the channel. Automotive inventories are normal, but the industrial market continues to face slow inventory correction due to non-cancelable orders from last year.
Q: Can you comment on the prepayments and NREs, particularly regarding LED technology?
A: We can't provide specific details on the prepayments or NREs. The NREs were unusually high this quarter, and while they will continue, they won't be at the same level in upcoming quarters.
Q: How do you have visibility for a gradual improvement in 2025, and what role do design-wins play?
A: Design-wins are a significant growth driver, especially in automotive, where we expect better growth than vehicle build volumes suggest. We also see strong traction in the consumer space, supporting growth in 2025 despite seasonal lows in Q1.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
