www.osram.com The OSRAM Way Forward Q4 FY15 Management Presentation (preliminary figures) OSRAM Licht AG | November 11, 2015 Light is OSRAM
Safe Harbor Statement This presentation may contain forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. Forward-looking statements may include, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. OSRAM Licht AG has based these forward-looking Statements on its views and assumptions with respect to future events and financial performance. Actual financial performance could differ materially from that projected in the forward-looking Statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. The information contained in this presentation is subject to change without notice and OSRAM Licht AG does not undertake any duty to update the forward- looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations. Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. 2 2 OSRAM Licht AG Management Presentation Q4 FY15 (preliminary figures) | November 11, 2015
Strong foundation for future growth FY15 • Successful financial performance with adj. EBITA margin of 10.2% • Board proposes dividend of € 0.90 per share “Diamond” initiative • Innovation & Growth Initiative with total R&D investment of € 2bn until FY20 • Additional CAPEX of € 1bn to invest in a new LED front-end plant to realize substantial growth potential and scale benefits Stakeholder Value • OSRAM intends to keep the dividend at least stable with € 0.90 per share for FY16 • Share buyback program of up to € 500m, starting Q1 CY16, duration 12-18 months • “5.1.5” ambitions for FY20 3 OSRAM Licht AG Management Presentation Q4 FY15 (preliminary figures) | November 11, 2015
Our industry faces strong trends and opportunities Demographic Safety & Urbanization Digitalization Infrastructure Mobility Change Security All OSRAM businesses have been evaluated and strategic actions derived 4 OSRAM Licht AG Management Presentation Q4 FY15 (preliminary figures) | November 11, 2015
OSRAM’s future set-up on foundation of 3 strong pillars Conclusions of strategic review Strategic Review 3 Pillar Strategy Strategic Actions CAGR / market size Strong worldwide • Balanced growth to gain OS Expand #2 in LED market share Market position 2 1 3 Worldwide #1 in SP • Invest in new markets Expand Automotive € Profitability Catch up in a growing • Realize existing growth Expand & LSS New set-up and profitable market and profitability potentials Technology Global top player • Keep Top 2 position and Lamps with strong chan- Carve-out expand portfolio Competitive nels and brands advantage 5 OSRAM Licht AG Management Presentation Q4 FY15 (preliminary figures) | November 11, 2015
OS: Build on strong worldwide #2 position in LED Balanced growth to gain market share LED becomes the new backbone of • Expand in existing niches and invest innovative lighting products in new niches Today • Gain market share in fast growing volume market LED/Laser Digital LED Lamps • Invest in new LED front-end plant to realize Auto light cinema luminaire substantial growth potential and scale benefits • Combine thinfilm & sapphire competence Ambitions • Capitalize market leading chip performance to expand market share • Facilitate double-digit revenue growth by large-scale investments LED Components • Focus on absolute EBITDA performance; remain in total free cash positive over investment phase 6 OSRAM Licht AG Management Presentation Q4 FY15 (preliminary figures) | November 11, 2015
OS: Investment in a new LED front-end plant to realize growth potential and scale benefits Timeline Q2-16 Q2-17 Q3-17 Q4-17 Q3-18 Q1-19 Ramp Ramp Construction Ready for Construction Ready for Module 1 Module 2 Module 1 Equipment Module 2 Equipment Module 1 Module 2 Facts new LED front-end plant • Greenfield LED front-end plant for epitaxial- and chip production • Kulim, Malaysia – close to existing Penang plant • One of the largest and most efficient 6’’ production facilities in the world • Mainly sapphire technology Total investment: € 1bn until FY20 (thereof € 370m in a first step) 7 OSRAM Licht AG Management Presentation Q4 FY15 (preliminary figures) | November 11, 2015
SP: Leverage worldwide #1 position in Automotive Invest in new markets • Invest in innovative markets with high barriers to entry and high growth potential • Laser: more light (up to 600 meters) without glare • OLED: design freedom in car design • Technology transfer from automotive to entertainment and medical Ambitions Xenon front light Laser front light • Create a € ~1.1bn 1) market for highly innovative laser and OLED products • Continue to outgrow global car production • Retain double-digit EBITDA margin during market build-up phase 1) Market size by 2025, externally validated market model OLED rear light 8 OSRAM Licht AG Management Presentation Q4 FY15 (preliminary figures) | November 11, 2015
LSS: Catch up in a growing and profitable market Realize existing growth and profitability potentials • “LS 800” program initiated for lighting solutions to return to profitable growth • Strengthen access to all key stakeholders and expand full-solutions offering including services on the focus verticals, e.g. industry • Maintain good momentum for light controls and LED components Smart Office as focus vertical • Strengthen connectivity know-how and innovative system architecture Ambitions • Turn into profitable growth mode • Close “white spots” through bolt-on acquisitions • Continuous, sustainable EBITDA improvement; long-term goal ~10% Innovative controls systems in facade illumination 9 OSRAM Licht AG Management Presentation Q4 FY15 (preliminary figures) | November 11, 2015
Lamps: Separation process is well on-track Lamps profile Status carve-out process • Carve-out date: 1 st July 2016 LAMPS at carve-out • Agreement with workers' council on carve- out process and social conditions Trade Channel Retail Channel • Cross-selling models defined • Pension obligations mainly covered LED Lamps • Sales process started Traditional Lamps Ambitions • Run as standalone business outside New Business of OSRAM • Keep Top 2 position • Enter new segments in growth areas e.g. OTC 2) luminaires Production 18 Sites Sales ~50 Sales offices 1) 1) Including representative offices 2) Over-the-counter 10 OSRAM Licht AG Management Presentation Q4 FY15 (preliminary figures) | November 11, 2015
“Diamond” initiative to foster sustainable growth, corporate value and technological leadership Total R&D € ~2bn Budget (FY16-20) Add. CAPEX for € ~1bn LED front-end plant (FY16-20) OSRAM TOP patent fields Intellectual OLED OS SP CI 1) Epitaxy, Automotive SSL, Innoventure, Property Chip concepts, Laser Lightmanagement, • ~600 patents p.a. conversion LED modules • 18,000 total • >2 patents per working day >6,600 patents >1,700 patents >2,700 patents >1,000 patents 1) Corporate Innovation 11 OSRAM Licht AG Management Presentation Q4 FY15 (preliminary figures) | November 11, 2015
“Diamond” initiative to foster sustainable growth, corporate value and technological leadership “5.1.5” ambitions for FY20 1) Revenue € 5.0 bn - € 5.5 bn EBITDA € 0.9 bn - € 1.0 bn EPS 2) ~ € 5 FY16 Outlook 3) - paving the way for future performance Comparable revenue expected to be slightly below FY15 level Adjusted EBITA margin expected to be substantially below FY15 level, mainly due to upfront investment as part of “Diamond”, as well as structural effects of the Lamps carve-out and the ongoing transformation. OSRAM Push Phase II with gross savings of roughly €400m Free cash flow is expected to come in with a low to medium negative triple-digit €m amount, impacted by the intended special funding of pension plans and strong increase of capex The sale of FELCO will lead to a sharp increase in net income and ROCE Based on the FY16 outlook and OSRAM’s midterm prospects we intend to keep the dividend at least stable with €0.90 per share 1) Presuming stable economic environment including no severe anomaly of semiconductor cycle and stable FX; excluding Lamps 2) Including share buyback 3) Including Lamps 12 OSRAM Licht AG Management Presentation Q4 FY15 (preliminary figures) | November 11, 2015
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