Ad hoc Announcement pursuant to Art. 53 Listing Rules of SIX Swiss Exchange
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ams OSRAM announces Q3 profitability at upper end of the guidance, revenue above mid-point and re-confirms mid-term target financial model on the back of strong automotive design-wins

• Q3: adj. EBIT margin of 7.9% at upper end of the guidance
• Q3: revenues of EUR 904 million above midpoint of the guidance
• Q4: expected fourth quarter revenues of EUR 850 to 950 million with adj. EBIT margin of 5-8%
• Mid-term target financial model reconfirmed with strong design-win base in automotive
• Rights issue and senior notes placement planned to be executed before year end, 2023 – subject to market conditions
• Revolving Credit Facility of EUR 800 million extended to Sep 2026
• Sale of company-held treasury shares ended

Premstaetten, Austria, and Munich, Germany (31 October 2023) -- ams OSRAM (SIX: AMS)
Q3 financial and business update

ams OSRAM announces revenues of EUR 904 million above the midpoint of the guided range of EUR 840 – 940 million, a 6% increase compared to Q2. The adjusted EBIT margin came in at 7.9% at the upper end of the guided range of 5-8% due to a positive impact from tight cost control measures and some positive one-time effects with respect to funding. The company is seeing a strong design-win traction in structurally growing markets, especially in automotive.

“We delivered a very solid quarter in a difficult market environment especially driven by our strong core business in automotive. Our ‘Re-establish the Base’ strategy & efficiency program is on track. The execution of our financing plan is also progressing well, and we expect to be able to execute the new rights issue and the new bond placement before year end - of course subject to market conditions,” said Aldo Kamper, CEO of ams OSRAM.

Semiconductor segment update

The Semiconductor segment represented 72% of Q3 revenues, or correspondingly EUR 648 million. End-markets showed a diverse pattern.

Automotive:

The automotive semiconductor business performed well during Q3, growing revenues 9% quarter-on-quarter and 2% year-on-year. The company saw healthy demand across all product groups. In particular, demand from China was strong, showing more and more a short-notice order pattern. Significant design-win momentum can also be reported. More than EUR 100 million of life-time value (LTV) of design-wins for the high-pixelated LED forward-lighting (EVIYOS) were added and the total number now stands at more than EUR 250 million. ams OSRAM’s recently launched intelligent RGB products for next generation dynamic interior lighting have also landed more than EUR 100 million LTV design-wins, already. Further, the recently announced new ALIYOS LED-on-foil technology, which enables unprecedented new automotive exterior display and lighting applications, has received excellent customer feedback with multiple customers seeking to collaborate with ams OSRAM.

Industrial & Medical (I&M):

While semiconductor revenues from I&M end-markets grew by 8% quarter-on-quarter, they are still relatively weak compared to a year ago. Essentially, all I&M verticals have come under macro-economic pressure. Nevertheless, the company did achieve a significant design-win at one of its Computer Tomography (CT) equipment customers with a life-time value of more than EUR 50 million.

Consumer:

Semiconductor revenues from the consumer end-market, primarily portable consumer device applications, mainly smartphones, improved quarter-on-quarter by around 6%, mainly in line with typical seasonality. Overall, the sales in this end market remain below previous years partially due to a weak macro-economic environment.

The adjusted EBIT of the semiconductor segment improved significantly, quarter-on-quarter, specifically from 2% in Q2 to 6% in Q3, or EUR 36 million. The sequential revenue increase contributed positively to the adjusted EBIT. In addition, the recently approved IPCEI funding for the company’s development of disruptive LED technologies at its site in Regensburg, Germany, helped profitability meaningfully, particularly due to a catch-up effect in the recognition of these subsidies.

Lamps & Systems segment update

The Lamps & Systems segment represented 28% of Q3 revenues, or correspondingly EUR 256 million. In both automotive and industrial & entertainment markets, business performed as expected.

The automotive lamps revenues came in as predicted with aftermarket sales contributing significantly. Quarter-on-quarter revenues grew by 6%.

The sales in industrial & entertainment applications performed in-line with weak end markets and declined by 15% compared to Q2.

The Lamps & Systems segment recorded an adjusted EBIT margin of 14%. This was driven by a healthy product, i.e. strong automotive aftermarket sales, with a further, low-single digit million EUR positive impact from one-time effects.

Quarterly financial summary

Adjusted Gross and Operating margins both clearly improved, quarter-on-quarter, reflecting the first results from the announced efficiency program as well as certain positive one-time effects. The average EUR/USD exchange rate stood at 1.09.

Operating cash flow came in at EUR 199 million in Q3 2023 compared to EUR 232 million in Q2.



Status of outstanding OSRAM minority shares

On September 30th, 2023, the Group held around 86% of OSRAM Licht AG shares, compared to 83% on June 30th, 2023. The total liability for minority shareholders’ put options stood at EUR 616 million at the end of Q3/2023 compared to EUR 748 million at the end of Q2/2023.

The company has an undrawn Revolving Credit Facility of EUR 800 million in place to cover any further significant exercises under the 'domination and profit and loss transfer agreement (DPLTA) put option. ams OSRAM’s bank consortium prolonged the term for the Revolving Credit Facility by one year, to September 2026, subject to the successful execution of the rights issue approved by the Extraordinary General Meeting.

Progress of 'Re-establish-the-Base' Program

On July 27th, 2023, the company announced its ‘Re-establish the Base’ program, focusing on its profitable core as a new base for sustainable, profitable growth. In terms of portfolio measures aimed at exiting certain non-core businesses in the semiconductor portfolio, the company has prioritized the carve-out of the passive optical components business and continues to work towards exit or divestment of the other relevant non-core semiconductors businesses. In terms of ‘monetizing innovation’, the company has completed the consolidation in the semiconductor segment from 3 business units to 2 as of October 1st, 2023, strengthening the accountability of the business units for streamlined end-to-end business performance.

In addition, Thomas Stockmeier, formerly CTO, has stepped down from the Management Board, effective September 30th, 2023, reducing the Management Board from 4 to 3 members, which will be further reduced to 2 members beginning January 1st, 2024.

Fourth Quarter Outlook

Whilst the company sees a strengthening demand for its automotive products, industrial markets remain very weak and Consumer markets remain modest. As a result, the Group expects fourth quarter revenues to stay relatively flat (at the midpoint) in a range of EUR 850 – 950 million. The adjusted EBIT is expected to come in at 5% to 8%. The EUR/USD exchange rate is assumed at 1.10.

Comments on 2024

The company expects to divest or exit certain non-core semiconductor businesses with EUR 300 to 400 million of 2023 revenues during FY2024.

In terms of business dynamics, ams OSRAM expects sustained weakness in the industrial business including some inventory corrections in the industrial segment during the first half, on top of normal seasonality of its other businesses regularly observed in FQ1. Consequently, the second half of FY2024 is expected to come in stronger than the first half, driven by new business wins and an expected soft market recovery.

The company expects positive free cash flow (including divestment proceeds) in 2024.

The ‘Re-establish the Base’ program is expected to deliver approximately EUR 75 million run-rate improvements to adjusted EBIT at the end of FY2024.

Mid-term target financial model reconfirmed

The Group reaffirms its medium-term target financial model announced in July 2023, targeting a revenue CAGR of 6-10% over the period 2023 to 2026 from the readjusted base (taking into account the announced portfolio adjustments) and an adjusted EBIT margin of around 15% by 2026. The mid-term target financial model assumes the largest growth contribution coming from the strong momentum in its target automotive semiconductor applications, where it is clear market leader, followed by mobile light sensors on the back of the large design-wins that the company secured earlier and, thirdly, volume sales from its 8” facility in Kulim, Malaysia, besides the other growth drivers in industrial, medical and selected consumer applications.

The model is also underpinned by the company’s expectation of a return to a CAPEX to sales ratio of around 10% by 2025, following completion of the recent above average investment cycle tied to the investments into the new 8” capabilities, thereby further improving its free cash flow and full implementation of the ‘Re-establish the Base’ program, which is expected to deliver approximately EUR 150 million run-rate improvements of adjusted EBIT by the end of FY2025.

Next steps financing plan

On September 27th, 2023 the company announced its holistic financing plan of EUR 2.25 billion to address debt maturities in 2024 and 2025 and increase its pro-forma equity ratio to approximately 30% by reducing debt (as per June 2023, calculated as equity / total assets). The plan consists of a capital raise with discounted rights issue of EUR 800 million, combined with the issuance of new senior unsecured notes (EUR and USD) of around EUR 800 million, and infrastructure related asset level transactions with proceeds of EUR 300 million in this fall/winter 2023/4. The financing is to be completed in 2024 with additional transactions in 2024 for an aggregate of approximately EUR 350 million through a combination of other financial instruments or other transactions, e.g. unsecured notes, convertible bonds or bilateral credit lines (the mix of which is to be determined based on market conditions).

On October 20th, 2023, the Extraordinary General Meeting approved the volume underwritten rights issue of EUR 800 million without any contestation. The company now plans to execute the rights issue and senior notes placement before year end, subject to market conditions.

On October 30th, the company also announced signing close to EUR 450 million in infrastructure related asset transactions including the sale and leaseback of its new Kulim facility with expected proceeds of around EUR 400 million. The other transaction related to divesting an already phased-out manufacturing facility located in Asia.

In view of the more than EUR 150 million higher proceeds from those infrastructure related asset-level transactions than initially assumed, the final financing amount in 2024 reduces to 200 million EUR, assuming a successful issuance of new senior notes of EUR 800 million.

The company has decided to terminate its program to sell its treasury shares.

Additional Information

Additional financial information for the third quarter as well 2023 is available on the company website. The third quarter 2023 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 third quarter results on Tuesday, 31 October 2023. The conference call for analysts and investors will start at 9.30am CET and can be joined via webcast. The press call will take place at 10.30am CET. Journalists who would like to join the press call can reach out to press@ams-osram.com or investor@ams-osram.com for further information.


Disclaimer

This announcement constitutes neither an offer to sell nor a solicitation to buy securities. Any offer regarding any publicly offered securities of ams-OSRAM AG (“ams-OSRAM AG” or the “Company,” and together with its subsidiaries, the “Group”) in Austria will be made solely by means of, and on the basis of, a securities prospectus (including any supplements thereto, if any) to be approved by the Austrian Financial Market Authority (Finanzmarktaufsichtsbehörde, the “FMA”) and to be published in accordance with the Regulation (EU) 2017/1129 (the “Prospectus Regulation”) on the website of the Company (www.ams-osram.com). An investment decision regarding any publicly offered securities of ams-OSRAM AG should only be made on the basis of a prospectus. Any orders relating to securities of ams-OSRAM AG received prior to the commencement of a public offering will be rejected. If a public offering is to be made in Austria, a securities prospectus will be published promptly upon approval by FMA in accordance with the Prospectus Regulation and will be available free of charge from ams-OSRAM AG during usual business hours, or on the ams-OSRAM AG website.

This announcement is not a prospectus according to Articles 35 et seqq. of the Swiss Financial Services Act (the “FinSA”) and as such does not constitute an offer to sell nor a solicitation to buy securities of ams-OSRAM AG or any other company. This announcement is made for information purposes only and shall not constitute investment advice. Any offer regarding any publicly offered securities of ams-OSRAM AG in Switzerland will be solely made by means of, and on the basis of, a prospectus (including any supplements thereto, if any) that is deemed approved in Switzerland without additional approval procedure in accordance with the FinSA, which will be made available free of charge from ams-OSRAM AG and UBS AG during regular business hours, or on the ams-OSRAM AG website prior to the public offering. An investment decision regarding any publicly offered securities of ams-OSRAM AG should only be made on the basis of the prospectus published for such purpose.

This announcement does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States, Australia, Canada or Japan, or any other jurisdiction in which such offer or solicitation may be unlawful. Any failure to comply with these restrictions may constitute a violation of United States, Canadian, Australian, Japanese or other applicable securities laws. The securities mentioned herein have not been, and will not be, registered under the US Securities Act of 1933, as amended (the “Securities Act”). The securities may not be offered or sold in the United States, absent registration or an exemption from the registration requirements of the Securities Act. There will be no public offer of the securities in the United States.

This announcement is not a prospectus for the purposes of Prospectus Regulation or Regulation (EU) 2017/1129 as it forms part of domestic law in the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (the “UK Prospectus Regulation”) and does not constitute an offer to sell or the solicitation of an offer to purchase securities of ams-OSRAM AG. Investors should not subscribe for any securities referred to in this document except on the basis of the information contained in any prospectus relating to the securities, the former of which may be published by the Company in final form on its website (www.ams-osram.com). Any such prospectus would include a description of risk factors in relation to an investment in the Group. You should conduct your own independent analysis of all relevant data provided in any prospectus and you are advised to obtain independent expert advice as to the legal, tax, accounting, financial, credit and other related aspects before making any investment decision.

No representation, warranty or undertaking, express or implied, is made by the Group, its shareholders, or any of the Group’s or its shareholders’ respective affiliates or any of its or their respective directors, officers, employees or agents (the “Representatives”) or any other person as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information set forth in this announcement or the opinions contained therein or any other statement made or purported to be made in connection with the Company or the Group, for any purpose whatsoever. No responsibility, obligation or liability whatsoever, whether arising in tort, contract or otherwise, is or will be accepted by the Group, the Company or its shareholders or any of their respective Representatives or any other person for any loss, cost or damage howsoever arising from any use of the information contained in this announcement, or for information or opinions or for any errors, omissions or misstatements contained therein or otherwise arising in connection therewith.

The information in this announcement is of an abbreviated nature and is subject to updating, revision, amendment, verification, correction, completion and change without notice. None of the Group, the Company or its shareholders or any of their respective Representatives or any other person undertakes any obligation to provide the attendee or recipient with access to any additional information or to update the information in this announcement or to correct any inaccuracies in any such information, including any financial data or forward-looking statements. Such information should be considered in the context of the circumstances prevailing at the time and has not been, and will not be, updated to reflect material developments which may occur after the date thereof. None of the Group, the Company or its shareholders or any of their respective Representatives have independently verified any of the information in this announcement.

This announcement may contain statements about ams-OSRAM AG or the Group that are or may constitute or include forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “plans”, “targets”, “aims”, “believes”, “expects”, “anticipates”, “intends”, “estimates”, “will”, “may”, “continues”, “should” and similar expressions. These forward-looking statements reflect, at the time made, the Group’s beliefs, intentions and current targets/aims concerning, among other things, the Company’s or the Group’s results of operations, financial condition, liquidity, prospects, growth and strategies. Forward-looking statements include statements regarding: objectives, goals, strategies, outlook and growth prospects; future plans, events or performance and potential for future growth; economic outlook and industry trends; developments of the Company’s or the Group’s markets; and the strength of the Company’s or any other member of the Group’s competitors. Forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The forward-looking statements in this announcement are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in the Group’s records and other data available from third parties. Although the Group believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Forward-looking statements are not guarantees of future performance and such risks, uncertainties, contingencies and other important factors could cause the actual outcomes and the results of operations, financial condition and liquidity of the Company and other members of the Group or the industry to differ materially from those results expressed or implied in this announcement by such forward-looking statements. No assurances can be given that the forward-looking statements will be realized. The forward-looking statements speak only as of the date of this announcement. The Group expressly disclaims any obligation or undertaking to release any updates or revisions to any forward-looking statements to reflect any change in the Group’s expectations with regard thereto or any changes in events, conditions or circumstances on which any forward-looking statements are based. No representation or warranty is made that any of these forward-looking statements or forecasts will come to pass or that any forecast result will be achieved. Undue influence should not be given to, and no reliance should be placed on, any forward-looking statement.

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