AMS: Osram synergies still need some time!

Free Issue No. 23 of 12.11.2020
There are media that are well-disposed towards the chip manufacturer AMS ... and there are also the others; this is correctly called democracy and freedom of the press, all good. Summa summarum, it was clear that the Osram takeover could not go through without friction and other losses. A certain amount of patience is now inevitably required, even though AMS would probably have done very well without the takeover... especially the share price.

Tempi passati, now it's time to look ahead and the integration should be implemented as quickly as possible. At the extraordinary general meeting, the hurdle of the "control and profit transfer agreement" was cleared. The next step, namely the entry in the German commercial register, has been launched. According to CFO Ingo Bank, it will then be possible to "press the start button"; in all likelihood this should be the case at the beginning of January. "We are well on track." Theestimated integration costs of EUR 400m could also be lower, and in the medium term AMS is targeting an EBIT margin of over 25% and double-digit revenue growth. Both companies see themselves very well positioned for the future.

As far as the figures for the 3rd quarter are concerned, there is, as usual, light and once in a while some shadow. Group sales - Osram is consolidated in the books for the first time - rose to USD 1.43 billion, compared with USD 679 million in the prior-year quarter. Adjusted operating profit (EBIT) shrank by about two-thirds to USD 60 million. Net income then shows the "shadow": the result was a loss of USD -143 million, after a profit of USD +166 million in the previous year. Even without the special costs, the net profit would only have been USD 11 million, because the absorbed Osram subsidiary delivered red figures. The outlook for the current 4th quarter was confirmed. AMS sales are expected to climb into the USD 650m to USD 690m range, and the group estimates an operating EBIT margin of 24% to 27%. Time is working for our price target of CHF 35!

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