OSRAM's Q2 earnings show strong performance, falling within projected figures, despite the influence of exchange rates, and the company has initiated the initial measures of its aggressive debt reduction strategy.
ams OSRAM Strengthens Financial Position with Deleveraging Plan
ams OSRAM, a leading global lighting solutions provider, is taking decisive steps to improve its financial position and reduce leverage. The company's current deleveraging plan and refinancing strategy aim to achieve a target leverage ratio of net debt to adjusted EBITDA below 2.
The company's efforts include extending its Revolving Credit Facility (RCF) by another year to support liquidity and refinancing flexibility. This extension will provide ams OSRAM with the necessary resources to navigate through the financial landscape.
In addition, ams OSRAM conducted a private placement of approximately EUR 500 million principal amount of senior notes due in 2029. These funds will be used to pre-finance around EUR 350 million for potential bulk exercises of OSRAM minority put options and to buy back about EUR 150 million of 2027 convertible bonds, subject to market conditions.
One of the key disposals under the deleveraging plan is the sale of the Entertainment & Industrial Lamps business to Ushio Inc for EUR 114 million on a cash-and-debt-free basis. This divestment is part of a broader plan targeting proceeds well above EUR 500 million through various disposals, including the dismantling of non-core assets such as the 8-inch-Kulim facility.
The strategic efficiency program "Re-establish the Base" is generating run-rate savings of approximately EUR 160 million. These savings are aimed at improving free cash flow and supporting deleveraging.
In the second quarter of 2025, ams OSRAM's Adjusted EBITDA margin was 18.8%, a significant improvement from the same quarter last year. This improvement is largely due to the structural savings from the 'Re-establish the Base' program.
Q2/25 revenues were EUR 775 million, with Lamps & Systems representing approximately 24% of the total. The significant quarter-over-quarter and year-over-year step down in Lamps & Systems was primarily driven by an inventory adjustment at US aftermarket retail chains.
The semiconductor business is expected to follow its typical pattern with a strong third quarter slightly weaker than a year ago due to the weaker USD. Q3/25 revenue is expected to be between EUR 790 million and EUR 890 million.
The Industrial & Medical (I&M) business improved by 21% quarter-over-quarter in Q2/25, led by typical seasonal upswings in various verticals, such as horticulture. Auto revenues showed a 9% year-over-year decrease, reflecting inventory adjustments in opto-electronic products due to demand uncertainties seen by Tier-1 and OEM customers.
Consumer revenues increased by a strong 15% year-over-year in Q2/25, due to a strong contribution of new products. The company expects sales into the aftermarket channel for its traditional auto lamps business to improve with the annual 'lighting season' beginning end of the summer.
ams OSRAM expects its Adjusted EBITDA to come in at 19.5% +/-1.5% for the third quarter of 2025, on the back of seamless execution ahead of plan of its Re-establish the Base strategic efficiency program. The Q3/25 EUR/USD exchange rate is expected to be 1.16.
Overall, ams OSRAM is combining refinancing instruments, targeted divestments, and operational efficiency to reduce leverage steadily and strengthen its financial position in 2025.
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