The following is a summary of the Ams-OSRAM AG (AMSSY) Q1 2024 Earnings Call Transcript:
Financial Performance:
Ams-OSRAM reported Q1 group revenues of €847 million, a decrease from Q4 2023 due to seasonality in the automotive aftermarket business and inventory corrections in industrial and medical markets.
There was a significant increase in R&D expenses to €140 million, in part due to the ongoing development of the microLED project.
The decrease in SG&A expenses to €93 million reflects cost-cutting measures, such as the 'Re-establish-the-Base' program.
The restructuring costs for the microLED strategy led to a transformation cost of around €700 million in 2024.
The gross margin underutilization costs recorded are around €300 million per year, which are expected to decrease as part of the company's growth plan.
The company reported an adjusted gross profit of €241 million, 7% less than the previous quarter.
Ams-OSRAM anticipates a decline in revenue and adjusted EBIT for Q2 due to seasonality, but expects positive cash flow excluding interest payments for FY'24.
Business Progress:
The company has redirected its focus from the scaled-down microLED project towards smaller-scale core development activities, securing over €5 billion in design wins.
The automotive and consumer semiconductor business have shown robust performance, despite the market uncertainty.
Product development for adaptive beam lighting for cars is progressing well, with good global traction and potential opportunities from a regulatory shift in the U.S.
The company plans to lease the Kulim 8-inch facility in Malaysia to a new lessee, as part of a cost-saving measure that is expected to improve EBIT and cash flow in 2025.
A part of their noncore semiconductor portfolio is anticipated to be divested by the end of 2024.
Their Android sensor production is projected to continue and grow with Korean and Chinese manufacturers.
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