Research Update: Austria-Based ams-OSRAM AG Outlook Revised To Negative From Stable On Higher Leverage; 'BB-' Ratings Affirmed

After weaker-than-expected preliminary 2022 results, we revised our forecast of ams-OSRAM AG's key credit metrics for 2023. We now anticipate its S&P Global Ratings-adjusted leverage will stay above 3.5x in 2023 with materially negative free operating cash flow (FOCF). The weaker macroeconomic environment and sharper than anticipated inventory corrections drive our revised base case, combined with higher than forecast temporary restructuring- and merger and acquisition (M&A)-related costs. While ams-OSRAM is adapting to the more deteriorated trading environment it has not changed its long-term strategy nor reduced its investments. This in our view could drive a return to organic growth and further profitability improvement from 2024, reducing ams-OSRAM's debt to EBITDA to below 3.5x. We revised our outlook on ams-OSRAM to

...- After weaker-than-expected preliminary 2022 results, we revised our forecast of ams-OSRAM AG's key credit metrics for 2023. We now anticipate its S&P Global Ratings-adjusted leverage will stay above 3.5x in 2023 with materially negative free operating cash flow (FOCF). - The weaker macroeconomic environment and sharper than anticipated inventory corrections drive our revised base case, combined with higher than forecast temporary restructuring- and merger and acquisition (M&A)-related costs. - While ams-OSRAM is adapting to the more deteriorated trading environment it has not changed its long-term strategy nor reduced its investments. This in our view could drive a return to organic growth and further profitability improvement from 2024, reducing ams-OSRAM's debt to EBITDA to below 3.5x. - We revised our outlook on ams-OSRAM to negative from stable and affirmed our '##-' long-term issuer credit rating on the company and our '##-' issue rating on the company's senior unsecured debt. -...

Research Update