June 22, 2021

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AMS loses Apple contracts but is betting on automatic redemption

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The semiconductor manufacturer AMS saw a drop in sales in the first quarter of 2021 compared to the previous quarter. Further decline is expected in the second half, but is dependent on the auto industry recovering in the second half of the year.

The first unit benefited from strong demand from the automotive industry compared to last year, but also from the medical sector.

Credit: Keystone

Turnover generated between January and March was $ 1.549 billion, down 9% compared to a “very strong fourth quarter of 2020,” the Swiss-listed Austrian group indicated Tuesday. A year ago, without Osram merging, it had sales of 549 million. To endorse this acquisition, the company is also adopting the company name “ams Osram”.

Operationally, Adjusted Operating Income Before Interest and Tax (EBIT) was 172 million, or 11% of sales, compared to 285 million in the previous quarter (17%). Profit has lost nearly $ 100 million, to $ 89 million, as of the end of 2020. Free cash flow is $ 151 million.

Sales are better than the AWP consensus forecast, when EBIT is lower. The revenue evolution reflects expected seasonal impacts, in the context of strong demand globally, according to the group. The semiconductor segment captured 65% of the revenue while the proportion of Lamps and Systems (L&S), including Osram’s historic auto business, for example, was 35%.

The first unit benefited from strong demand from the automotive industry compared to last year, but also from the medical sector. For example, the range relies on chemical-free disinfectants using LED technology. The L&S division also benefited from the better health of the automotive sector, improving its profitability over the course of one year.

Apple lost the orders

The group’s management expects revenues of between $ 1,430 and $ 1.530 million in the second quarter and expects a slight increase in revenue in the second half of the year compared to the first quarter. It focuses again on cars, but expects smaller market share in the consumer market with less than 5% impact on revenue. For JP Morgan, this is a confirmation of contract losses, especially in 3D sensors, from its major customer, Apple.

In order to reduce the effects on profitability, savings measures will be put in place, which will first affect production in Asia, said Ingo Bank Chief Financial Officer during a conference call.

In addition, the group faces large purchase orders, which maximizes its production capacity. It explains that it may encounter supply difficulties in certain sectors of the semiconductor industry, resulting in a direct or indirect impact on revenue, depending on product availability and customers’ future manufacturing plans.

Premstätten confirmed its long-term forecast with an Ebit margin of 20-25%.

In addition, it announced the de-listing of OSRAM shares and also intends to present to vote shareholders the buy-back of up to 10% of its share capital, during the public meeting on June 2.

Mirabaud notes that sales, which are generally low at the start of the year, may be lower than the fourth part of 2020, and demand in the end markets is good.

For Barclays, the results of AMS are overshadowed by losing contracts with its major American customer, Apple, and buying back a minority stake in Osram.

At around 1:30 pm, the volatile AMS index continued its advance, rising 5.3% to 16,845 francs on the SLI stable at 1,805.63 points.

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