Bulletin: Sudden Loss Of MicroLED Client Dents ams-OSRAM's Long-Term Revenue Prospects Without Changing Forecast Metrics

This report does not constitute a rating action. STOCKHOLM (S&P Global Ratings) March 6, 2024-- S&P Global Ratings said today that Austria-based ams-OSRAM 's credit metrics will not change materially on the unexpected cancellation of its microLED project by the customer. We continue to expect S&P Global Ratings-adjusted leverage of about 3.5x and about breakeven free operating cash flow for 2024. That said, ams-OSRAM (BB-/Negative/--) can no longer count on the nearly €200 million in revenue that the microLED project was expected to generate in 2026. The company invested significant capital expenditure (including capitalized R&D spending) of about €1.3 billion into its microLED strategy, considering the Malaysian factory in Kulim and a pilot line in Regensburg. These investments, most of

...March 6, 2024 This report does not constitute a rating action. STOCKHOLM (S&P Global Ratings) March 6, 2024-- S&P Global Ratings said today that Austria- based ams-OSRAM's credit metrics will not change materially on the unexpected cancellation of its microLED project by the customer. We continue to expect S&P Global Ratings-adjusted leverage of about 3.5x and about breakeven free operating cash flow for 2024. That said, ams-OSRAM (##-/Negative/--) can no longer count on the nearly 200 million in revenue that the microLED project was expected to generate in 2026. The company invested significant capital expenditure (including capitalized R&D spending) of about 1.3 billion into its microLED strategy, considering the Malaysian factory in Kulim and a pilot line in Regensburg. These investments, most of which will be written off (600 million-900 million), were a key reason for the company's high capital expenditure and negative free cash flow in 2022-2023. In return, the microLED investment...

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