Yesterday, Osram disclosed the first quarter of the 2018 fiscal year (October 1, 2017 - December 31, 2017). In the first quarter of fiscal year 2018, OSRAM continued to grow and increased capital expenditures. The market still has a great demand for high-tech products, especially for optoelectronic semiconductor products. This quarter's comparable revenue reached 1.03 billion euros (equivalent to about 8 billion yuan), an increase of 5% compared with the same period last year. The EBITDA of the special project has reached 172 million euros (equivalent to about 1.836 billion yuan), which is basically the same level as last year. The adjusted EBITDA margin reached 16.7%.
Due to the strong growth in operation, the company almost completely offset the negative impact of monetary factors, continue to increase investment in research and development, coupled with the expansion of production scale (such as opening a new plant in Kulim, Malaysia), also increased the company's Capital expenditures. R&D expenses have now reached 9.4% of revenue. OSRAM will continue to operate smoothly in accordance with its development strategy.
As previously announced, the fiscal year 2018 will be affected by capital expenditures and monetary factors. Due to the negative impact of recent exchange rate changes, revenue losses in the first quarter exceeded 60 million euros. In order to achieve sustainable profitable growth, OSRAM will continue to invest in its production capacity and future technologies. Product revenue based on new LED-related technologies has accounted for two-thirds of actual revenue.
Dr. Olaf Berlien, CEO of OSRAM Group, said: “Our first quarter performed well. Although the exchange rate impact has caused us tremendous resistance, we have achieved further growth and maintained a high profitability. From now on We are expected to climb again in the second half of this fiscal year. The market has strong and sustained demand for our products, which shows that our decision to increase production and invest in emerging technologies is correct because they enable us to seize better opportunities. To achieve long-term growth."
From the business sector, the first quarter data shows that the growth momentum and operation of OSRAM Opto Semiconductors (OS) have not been affected. In the first quarter, the increased cost of increased production reduced profits, which we have already anticipated.
In order to cater to the high demand for LEDs (especially in general lighting), OSRAM opened a new plant in Kulim, Malaysia in November 2017. Production scale will expand according to plan, and production capacity is also encouraging. We are expected to witness the additional capacity brought by the first phase of investment at the end of the fiscal year.
Special lighting (SP), which accounts for the largest proportion of revenue, was also dragged down by the exchange rate. The current status of the global automotive products sector is mixed. The automotive market has not changed since the fourth quarter, and we expect it to continue to grow, but it will be lower than the 2017 fiscal year.
However, LED lighting still has a continuous breakthrough, especially in the automotive industry. LEDs will gradually replace traditional lighting technologies in new cars, which will help us in our business strategy.
In the field of lighting system solutions (LSS), we have not seen much improvement in the business environment. The construction sector for new industrial and office buildings continues to be sluggish, especially in the North American market. As a result, demand for lighting fixtures, electronic ballasts and related services in this category continues to decline.
In the 2018 fiscal year, OSRAM will continue to stand on the ground and look to the future. The company's revenue growth rate is between 5.5% and 7.5%. The adjusted EBITDA for special projects will be around 700 million euros, and will be affected by factors such as currency, the cost of production at the Kulimin plant and the increase in research and development funds – which will increase the cost of hundreds of millions of euros. In the current fiscal year, OSRAM estimates an expected earnings per share of 2.4 to 2.6 euros. Free cash flow is expected to be between -50 million and -150 million euros. The Board of Directors is confident in OSRAM's medium-term development prospects, so it plans to achieve a dividend of at least 1.11 Euro per share for the 2018 fiscal year.
In the past three months, the euro exchange rate has been rising, especially against the US dollar. This situation has an impact on OSRAM's key data. The forecast for this fiscal year from November will be based on the exchange rate of 1 Euro at the time equal to 1.18 USD.
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