ams Osram (AMS) Q4 2023 earnings summary

Executive summary

• Q4 revenue was €908m and adjusted EBIT €62m at a 6.9% margin, both above guidance midpoints; FY23 revenue was €3.59bn and adjusted EBIT €233m at a 6.5% margin.

• Strategic focus shifted to profitable core markets and structural growth, with FY23 design wins exceeding €5bn across core semiconductor businesses.

• Automotive semiconductor demand was resilient while consumer and industrial markets remained weak; FY24 expectations called for a stronger H2 than H1.

Financial highlights

• FY23 revenue fell 25% YoY to €3.59bn from €4.82bn; adjusted EBIT declined 43% to €233m from €407m, with adjusted margin down to 6.5% from 8.4%.

• FY23 adjusted net result was €50m and adjusted diluted EPS €0.16; IFRS net loss was €1.613bn and unadjusted diluted EPS -€5.20.

• Q4 adjusted gross margin was 28.7%; adjusted net loss was €16m and IFRS net loss €82m.

• FY23 operating cash flow rose to €674m from €599m; capex was €1.049bn, and free cash flow including divestments and excluding interest was -€375m.

Outlook and guidance

• Q1 2024 guidance: revenue €800m–€900m and adjusted EBIT margin 4%–7%, based on EUR/USD 1.08.

• FY24 outlook anticipated continued macro weakness in H1 and improvement in H2 from design-win ramps and market recovery; year-end savings run-rate target was ~€75m.

• FY24 PPE capex was expected slightly above €500m, including ~€50m delayed from 2023; positive FCF was expected including divestment proceeds and before interest.

• Mid-term targets included 6%–10% revenue CAGR, ~15% adjusted EBIT margin, capex at ~10% of sales, positive FCF after interest and net debt/adjusted EBITDA below 2x.