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Annual General Meeting of OSRAM Licht AG

Kathrin Dahnke

CFO of OSRAM Licht AG

Virtual Annual General Meeting from the Osram Lighthouse, Munich, February 23, 2021

OSRAM Licht AG

Marcel-Breuer-Straße 6, 80807 München, Deutschland Corporate Communications & Brand Strategy

The spoken word takes precedence

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Shareholders, colleagues, ladies and gentlemen. A warm welcome to you all.

Dr Berlien has described the rocky road we have traveled in recent times. 2020 was without a doubt a very challenging year for Osram. It was marked in particular by the numerous effects of the corona crisis. That crisis was certainly one of the greatest business challenges that this company has faced in decades.

Because it has affected us in every way possible - in protecting our employees, in our responsibility to our customers, in ensuring our competitiveness, and in safeguarding our finances.

In spite of many adversities, the company has performed well. But just like the rest of the world, we have not come through the crisis unscathed. We can, however, say with pride that thanks to the strong Osram team we have managed the crisis really well so far. Despite the decline in sales caused by the corona pandemic, we have kept our operating earnings more or less stable.

Ladies and gentlemen,

Let me go into more detail on business trends in the past year, and on the key figures for the first quarter of 2021.

We'll look first at the past fiscal year. Despite a comparable decline in sales of almost 14 percent due to corona, our free cash flow remained positive at twelve million euros. The adjusted EBITDA margin was at the same level as in the previous year at over eight percent.

Adjusted EBITDA from continuing activities fell from 307 million euros to 253 million euros. Our three business units developed differently. In Opto

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Semiconductors the realignment of the product portfolio and the associated reduction in complexity paid off. As a result, the adjusted EBITDA margin in this area climbed to over 20 percent despite a corona-related decline in sales of around nine percent to 1.34 billion euros. At 190 million euros the free cash flow of the segment was around 30 million euros higher than in the previous year.

The Automotive business was harder hit by the economic effects of the pandemic. Revenue fell by 14 percent to 1.59 billion euros. Adjusted EBITDA was around 76 million euros - and was affected by the Osram Continental joint venture. The Digital unit was even worse affected, with revenue falling by one fifth to 742 million euros. As a result, adjusted EBITDA was negative at minus 28 million euros.

Now to the first quarter of 2021. Our first three months of business reflect both the economic recovery of our markets and the success of our cost-saving measures. While sales in the first quarter were around the same level as in the previous year at 840 million euros on a comparable basis, profitability increased significantly. Adjusted EBITDA climbed by around 40 percent to 162 million euros. That corresponds to an adjusted EBITDA margin of more than 19 percent.

Free cash flow at 50 million euros also showed a very positive trend. Demand from the automotive industry increased significantly - and sooner than we expected. Our semiconductor business in particular performed superbly. Opto Semiconductors achieved an adjusted EBITDA margin of over 30 percent, setting a new record. Our plants in Regensburg and Kulim were recently fully utilized.

The past fiscal year was almost entirely overshadowed by the global pandemic.

Mr. Berlien has already described to you our SHIELD program for dealing with the corona crisis. Its effects are reflected very concretely in our figures. A bundle of precautions consisting of hundreds of operational and financial measures across all business areas resulted in a positive impact on earnings of over 50

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million euros in the 2020 fiscal year. The uptick in free cash flow was even more impressive. The SHIELD program resulted in about 132 million euros here.

We put the brakes on expenditure early and consistently. Investments amounted to almost 100 million euros in the past financial year. That is considerably less than in the previous year. However, we have not spared any money on important future projects. Mr. Berlien has just presented some of them. However, this low level of investment will remain an exception. The decline is due solely to the exceptional year of 2020. We want and will continue to invest in our company's technology. And therefore in the competitiveness of the company.

At the same time, the issue of cost structure remains important. We have acted consistently here in the recent past. And we have kept our promise. Between 2018 and the end of December 2020 we reduced the cost base by 280 million euros through our strategic savings programs. As a result, we were able to cope relatively well with the decline in sales during the crisis.

As in the past, we will review all businesses in terms of their profitability. And we will take decisive action where necessary. We have recently responded to long-term market changes:

  • - We have consolidated our production of cinema lamps in Berlin and discontinued operations in Eichstätt.

  • - We acted decisively when the markets were not yet ready for our projects.

    Last year, for example, we agreed with Continental to return our joint venture in modern automotive lighting to the parent companies. We want this process to be completed with the agreement of both parties by the fall.

  • - And we decided to find a better new owner for our control gear and electronics segment. As we continue our journey to becoming a photonics company, the control gear business will be able to develop better with a

OSRAM Licht AG

Marcel-Breuer-Straße 6, 80807 München, Deutschland Corporate Communications & Brand Strategy

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OSRAM Licht AG published this content on 23 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 February 2021 19:23:03 UTC.