In the third quarter of fiscal 2016, Osram continued to see healthy demand in its three strategic core businesses and additionally benefited from pull-forward effects related to the carve-out of the lamps business. On a comparable basis, i.e. adjusted for portfolio and currency effects, revenue in the three months ending June 30 rose eleven percent from a year earlier and reached EUR 1.44 billion (US $1.58 billion). About half of this growth was attributable to brought-forward deliveries that were carried out in the third quarter in view of the separation of the IT systems of Osram and the lamps business. On a nominal basis, Osram generated revenue growth of almost seven percent. EBITA1 excluding special items increased 13% to EUR 145 million, translating into a margin of 10.1%. Especially the LED components business (Opto Semiconductors) continued to show a pleasant earnings development. Net income came to EUR 28 million and was influenced by extraordinary expenses relating to the carve-out of the lamps business, among other things. Osram confirms its outlook for fiscal 2016.
Osram reporting segments in the third quarter
Specialty Lighting (SP), which includes the Automotive Lighting and Professional Industrial Applications units, not only benefited from the above-mentioned pull-forward effects but also from continuing growth of the automotive business in the third quarter, and recorded comparable revenue growth of 16% from the year-earlier period. The EBITA margin excluding special items reached 11.6% and was influenced by an increasing revenue share of LED-based products and higher expenses for innovative products, among other things. The recently agreed acquisition of U.S.-based Novità Technologies strengthens Osram's market position regarding automotive LED modules.
The Lighting Solutions & Systems (LSS) reporting segment, which comprises the luminaires and systems business, benefited from favorable demand for indoor luminaires, LED drivers and other products as well as pull-forward effects in the third quarter. As a result, comparable revenue rose 17% in total, and the adjusted EBITA margin came in at 0.2%, just above break-even. LSS products were recently in the spotlight on occasions such as the European soccer championship, where Osram equipped three stadiums with modern lighting technology, including the national stadium near Paris.
Opto Semiconductors’ (OS) revenue increased 13% on a comparable basis in the third quarter and reached a new record level of EUR 371 million, driven by the automotive and industrial businesses as well as the infrared business. At 22.2%, the EBITA margin again reached a very good level, among other things due to the continued strength of the premium products business. Construction of the new LED chip factory in Kulim, Malaysia, is progressing according to plan.
The Lamps reporting segment, which comprises the general lighting lamps business, also benefited from the pull-forward effects related to the IT separation. Comparable revenue rose three percent in the third quarter. Excluding this effect, comparable revenue would have declined slightly. The adjusted EBITA margin was 5.5%.
Outlook for fiscal 2016
The outlook for fiscal 2016 including Lamps is confirmed. For fiscal 2016, the managing board expects revenue on a comparable basis to be above the prior-year level. The EBITA margin, adjusted for special items, is anticipated to reach more than 10%. In addition, the managing board expects net income and return on capital employed (ROCE) to rise sharply due to the book gain from the sale of the Felco shares. Due to a strong increase in capital expenditure as well as special items such as the special funding of pension plans, free cash flow is expected to amount to a low to medium negative triple-digit million-euro figure. The managing board is confident about Osram's positive medium-term prospects and therefore intends to keep the dividend at least stable with EUR 0.90 per share for fiscal 2016.
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