ams Osram (AMS) Q1 2025 Fixed Income earnings summary

Executive summary

• Q1 2025 revenues reached EUR 820 million, above the midpoint of guidance, with a 16.4% adjusted EBITDA margin and improved order entry as book-to-bill exceeded 1, reflecting resilience despite cyclical and FX headwinds.

• Profitability improved due to cost savings, non-refundable engineering payments, and the 'Re-establish the Base' program, which is ahead of plan and delivered EUR 135 million in run-rate savings by quarter-end.

• Comprehensive deleveraging strategy underway, including repayment of EUR 447 million convertible bond and strong liquidity position.

• Strategic asset sales and other options are being prepared to raise at least EUR 500 million for deleveraging, with timing targeted before November 2026.

• Automotive semiconductors faced inventory correction, while consumer segment showed structural growth driven by new product launches.

Financial highlights

• Q1 2025 revenue was EUR 820 million, down 7% sequentially and 3% year-over-year; adjusted EBITDA rose 9% year-over-year to EUR 135 million (16.4% margin), and adjusted EBIT was EUR 58 million, up 32% year-over-year.

• Adjusted gross margin improved to 28.4%; adjusted EBIT margin rose to 7.1% (+190 bps YoY).

• Operating cash flow was EUR 10 million, free cash flow was -EUR 28 million, impacted by inventory build-up and timing of payments.

• Cash on hand at quarter-end was EUR 573 million after repaying EUR 447 million in convertible debt; available liquidity at EUR 1.2 billion.

• Net debt increased to EUR 1,484 million (or EUR 1.9 billion including SLB Malaysia); net leverage at 2.0x, below the covenant of 4.0x.

Outlook and guidance

• Q2 2025 revenue guidance: EUR 725–825 million, with a negative FX impact of EUR 35 million expected; adjusted EBITDA margin for Q2 expected at 18.5% ±1.5 percentage points.

• Full-year 2025: Second half expected to be stronger, with free cash flow above EUR 100 million, including government grants and net interest payments; CAPEX to remain below 8% of sales.

• Profitability to improve versus FY24 as cost savings ramp up; stronger second half anticipated due to product ramp-ups and seasonality, but subject to macro and tariff risks.