- by Alexander Hübner

Munich (Reuters) - The new boss of AMS Osram is thoroughly restructuring the German-Austrian chip and sensor group.

Aldo Kamper announced on Thursday evening that the company would focus on LED and sensor chips for the automotive sector, industry and medical technology and focus on profitability. "Our profitability is not where we want to be," he said. The business with smartphone components, which made AMS big thanks to its major customer Apple and accounts for almost a quarter of sales, is to play a subordinate role in future. "We will remain in the consumer business, but will be more selective," said the new boss. "We cannot rule out job cuts." The Dutchman intends to divest unprofitable businesses with a turnover of 300 to 400 million euros - including lenses for smartphones, for example.

The realignment is associated with a write-down of 1.3 billion euros because the prospects for part of the business have clouded over. This will result in a loss of this amount in the second quarter. "With a new Executive Board, the balance sheet needs to be tidied up," said the new CFO Rainer Irle. Around three quarters of this is accounted for by goodwill from the opto-semiconductor business of the Munich-based lighting group Osram, which AMS swallowed up for more than four billion euros after a tough takeover battle. Today, the entire group with 21,000 employees and headquarters in Premstätten near Graz is only worth two billion euros.

However, stock market analysts gave Kamper advance praise: On Friday, the shares shot up 14 percent to 7.69 francs on the Zurich stock exchange.

Kamper himself had worked for Osram for a long time. After temporarily leading the automotive supplier Leoni, which narrowly avoided bankruptcy, he was brought to AMS-Osram in the spring. From January 2024, the Management Board will consist solely of him and former Siltronic manager Irle. The positions on the Management Board held by Chief Technology Officer Thomas Stockmeier and Mark Hamersma will be eliminated.

"We have a very strong core, now we need to take the right steps to improve our company performance," said Kamper. "The key decisions have now been made." He sees the semiconductor portfolio with intelligent sensors and emitters as the core business. The smartphone business is shrinking. "Price pressure remains high and new components will not be used until 2024," AMS Osram stated.

The company should become smaller but more profitable, Kamper explained. A savings program should improve earnings before interest and taxes (EBIT) by 150 million euros by 2025. However, this will initially cost 50 million euros. One year later, AMS Osram should achieve an operating return on sales (EBIT margin) of 15 percent, around twice as much as last year. Sales are expected to grow - on a reduced basis - by six to ten percent per year. According to calculations by Stifel analyst Jürgen Wagner, this would mean a turnover of four billion euros and an EBIT of 600 million in 2026. In 2022, AMS Osram generated sales of 4.8 billion euros and an adjusted EBIT of 407 million euros.

This would allow AMS Osram to reduce its mountain of debt, which has swollen to two billion euros. Irle wants to reduce the debt to less than twice the operating result - currently it is almost three times. Talks about refinancing the loans are underway. "I have a precise plan on the table that will work," said Irle.

(Report by Alexander Hübner. Edited by Olaf Brenner. If you have any queries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)