Automotive, consumer market slump trigger Osram job cuts

January 25, 2019 // By Christoph Hammerschmidt
Automotive, consumer market slump trigger Osram job cuts
After a weak start to the new fiscal year, lighting group Osram has announced job cuts at its chip subsidiary Opto Semiconductors. Of the 2800 jobs in Osram’s semiconductor fab in Regensburg (Germany), 300 will be cut. The company cites the weaker demand from the automotive industry, the company's most important customer, as one of the reasons. A company spokesman confirmed the reports to eeNews Europe, including the level of job cuts.

The recently released figures for the first quarter of fiscal 2018/19 were poor: On a comparable basis, sales fell by 15 percent to 828 million euros. Adjusted operating profit (EBITDA) fell by almost half to just over EUR 93 million, or 11.3 percent of revenue, compared with 18.5 percent in the previous quarter. In addition, the forecast for the year as a whole is endangered: The achievement of the targets is "subject to a revival of incoming orders in the coming months," it said.

Osram had already had to issue two profit warnings last year. For 2018/19, the Group has forecast sales growth of a maximum of three percent and a shrinking operating return on sales of 12 to 14 percent (2017/18: 14.7 percent).

Osram’s Opto Semiconductors business unit suffered a decline in sales of 16.9 percent. The company cites weak demand from automobile manufacturers and their suppliers, the slump in sales by smartphone manufacturers (especially Apple and Samsung) and the effects of the trade conflict between the USA and China as the main causes.

The semiconductor manufacturer's weakness is somewhat surprising, as the automotive industry is currently switching from conventional lighting to LED technology both for interior and for exterior lighting. But in the world's largest car market, China, car manufacturers are apparently increasingly giving preference to domestic products. "Above all, our sales in China are definitely weak," confirmed the Osram spokesman.

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