Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the OSRAM Licht AG analyst and investor call. Throughout today's call, our participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. I would now like to turn the conference over to Julia Klostermann . Please go ahead.
Thank you, Stuart. Good morning and good afternoon, ladies and gentlemen. A warm welcome to the OSRAM conference call on our fourth quarter as well as fiscal year 2020 results. With me on the call are Dr. Olaf Berlien, our CEO, and Kathrin Dahnke, our CFO. Olaf and Kathrin will comment on the market development and our financial performance. Afterwards, we will be happy to answer your questions. As a reminder, today's call is being recorded. You can follow the webcast on our website at osram.com/ir, where you will also find the presentation available for download. As with previous conference calls, I would like to draw your attention to the safe harbor statement on page two of the earnings release presentation. As usual, it applies throughout this call. It is now my pleasure to hand over to you, Olaf.
Yeah. Thank you, Julia. Ladies and gentlemen, a warm welcome to our conference call today. As usually, I will start with an overview of our fiscal year and the current status of the combination with ams, Kathrin will then go into the financials in more detail. As usual, we will be happy to answer to your questions. Let's get started on slide number 3. The past fiscal year was dominated by two topics, COVID-19 and various takeover offers. Thanks to our efficient management, we have mastered the COVID crisis very well. We acted early in January 2020 and consistently. Thus, we were able to protect both our employees and our company, this has paid off. Despite the comparable revenue decline of almost 14%, our free cash flow was positive, no cash burning in 2020. Our adjusted EBITDA margin remained stable at over 8%.
It also shows that we continued to make progress with our transformation, delivering on our performance, as Kathrin will show us, on our saving targets. Which brings me to the second dominating topic of the past year, the takeover offer by ams. As you know, three days ago, our shareholders approved the domination agreement between OSRAM and ams with over 99.8% of the vote. I think that's a major milestone for combining our businesses. Pending official court entry, we expect operations of the joint company to commence in early 2021. I move on slide number four and the fiscal 2020 figures by quarter. As anticipated, the months of April and May marked the low point in terms of revenue and profitability. We had up to 50% decline in April.
Since then, most business segments have been seeing gradual improvements, which is clearly shown in the recovery of the Q4 figures. The Opto and Automotive businesses benefit from the improved business situation, especially in China and in North America. On a comparable basis, we recorded a sequential revenue increase of 26% compared to Q3. Adjusted EBITDA improved by almost EUR 100 million quarter to quarter, reflecting the full effectiveness of our COVID-19 related saving measures. Overall, this translate to the following yearly figures on slide number five. As mentioned, comparable revenue on the whole fiscal year fell by almost 14%, affecting almost all business segments. The entertainment and Automotive businesses were hit hardest. At Opto, the streamlining of the product portfolio has paid off. Here, the adjusted EBITDA margin climbed to over 20%, despite lower sales volumes.
For the whole group, it means that we managed to keep the comparable EBITDA margin almost stable at over 8%. This number reflects the improved cost base due to our performance programs. Free cash flow came out positive at EUR 12 million. I think that's a remarkable result in these special times. This was mainly due our active working capital management and of course, our CapEx discipline. Which brings me to slide number six and the economic environment. We have clearly observed a further stabilization in important economic indicators in the last quarter. In line with our own experience, the impact of the COVID-19 pandemic on the global economy was mostly felt in April and May, as I said. Since then, there has been a rapid recovery progress, which is illustrated by the OECD's composite leading indicator on the left side.
It has almost recovered in the last quarter. While another important indicator for us, and you know it from the past, the JPMorgan Purchasing Manager Index on the right side, already exceed pre-pandemic levels. Especially the positive development in China makes us cautiously optimistic for our markets, the most important of which remains the automotive market. Let's take a deeper look on the global car production forecast on slide seven. This shows the global production figures as predicted by IHS. Light vehicle production for our fiscal year 2020 was down by 18% to less than 74 million vehicles. It significantly improved in the last quarters, and the forecast for the fiscal year 2021 sees a further recovery. IHS expect global car production numbers to settle at around 20 million vehicles per quarter. That means year-on-year growth of 13.5% to almost 84 million cars.
Especially Europe and NAFTA, which were hit hardest last year, should see increases of 17%-21% respectively. China has already recovered to a large extent and expected to grow another 5%. This positive development is also reflected to our order volumes, especially bookings for our Automotive LEDs here in the first quarter of the year 2021 are very strong for our full first half year. That means October till March. All this is subject to a corresponding development of the upcoming months, especially regarding COVID-19. I think it's good to remain cautious. For the time being, our measures to safeguard liquidity remain essential. I move to slide number eight. Despite the pandemic and our efforts of retaining cash, this was never at the expense of strategic projects. One of these projects at OS is the technology evolution of the LEDs for display solutions.
Here, the market is currently moving from standard side emission backlighting to so-called Mini LEDs. They are only about 200 micrometers in size and mark an important technology step forward in terms of high-end displays. Production will start soon in our plant in Kulim, Malaysia, where we can use our existing expertise. In a second step, this will be after 2022, OS is well positioned in the area of the MicroLED. This is the next generation of LEDs. At less than 100 micrometers, they are smaller than a diameter of a human hair. That shows you really the increase of the performance. By combining red, green, and blue MicroLEDs into an array, we will enable direct emissive displays with clear benefits, namely brilliant colors, high contrast, high efficacy, and fast reaction times. That takes me to slide number nine. Apropos fast.
In the last two quarters, I presented a so-called Shield program to you. It contained more than 500 COVID-19 measures in the group that we took to safeguard profit and cash. Human resource measures such as short-time working, as well as hundreds of operational and financial saving initiatives. In total, we were able to implement measures with an EBITDA effect of over EUR 50 million only in 2020. At EUR 132 million, the Shield program has also had a significant effect on free cash flow, while liquidity was improved by almost EUR 190 million. Of course, we have also continued the transformation of our company as we reported in the past, and which brings me to slide number 10. Also in Q4, we continued to implement our existing performance and transformation program. With the biggest contribution coming from corporate overhead adjustments and the transformation of our plants worldwide.
Total savings only in Q4 amounted of EUR 35 million. Despite the COVID-19 challenges, I think, and the integration project, with an annual savings of another EUR 128 million, we clearly exceeded our ambitions by more than one-third. Now I hand over to Kathrin for a deep dive in the financials.
Thank you, Olaf. Let's now start to take a more detailed look at the fourth quarter figures, starting with our revenue development on slide 11. Overall, our revenue development improved substantially compared to the previous quarter, meaning the third quarter of the fiscal year, due to a slight recovery in our core markets, resulting in a revenue in absolute terms for the OSRAM Group of EUR 739 million. Sequentially, that was an improvement over 26.3%. Looking at the development year-over-year, we had a moderate negative effect from foreign exchange rate, but on the other hand, a slightly positive portfolio effect. Thus, comparable growth was -17.7%, and mainly impacted by COVID-19. Looking at our regions, APAC declined by -18.3% comparable. Therein, China declined by -11.6% year-over-year.
The biggest hit in APAC region came in for DI sales, with the Corona impact on entertainment, along with some challenges in the city beautification business. AM declined significantly in APAC and Opto sales, and showed a clear decline compared to prior years. The biggest hit this quarter can be seen in EMEA, with a comparable decline of -20.9%. This development was driven by all business units, with DI showing the biggest decline followed by OS and AM. Americas showed a significant drop in revenue with -14% on a comparable basis, driven by all segments. Let me now come to the revenue development in the three reporting segments, and let's start with Opto.
Compared to the third quarter this year, OS revenue showed a comparable growth of 11.4%, while the OS revenue in the fourth quarter saw a significant decline of -14% compared to previous quarter four of the previous fiscal year. Thus resulting in a revenue in absolute terms of EUR 320 million. Within Opto, Automotive revenue had the biggest hit in absolute terms, mainly demand-driven. While illumination-related revenue came in rather flat on a comparable basis, visualization and laser experienced a slight increased demand for industrial laser applications. Sensing showed significant decline performance, with double-digit percentage negative year-on-year growth. Let me now move to the revenue development in the reporting segment Automotive.
Overall, the AM revenue came in at EUR 395 million, resulting in a comparable revenue growth of remarkable 45% compared to quarter three of this fiscal year, mainly driven by our traditional business and OSRAM Continental. Year-on-year, however, automotive LED components and our traditional light source business with OEM showed a substantial decline in the fourth quarter. Our aftermarket business was only slightly negative. The revenue development of the OSRAM Continental subsidiary showed only a modest decline in quarter four compared to quarter four in the previous year. Coming now to the revenue development of Digital. DI sales were hit the most due to the corona impact, especially in the entertainment and city beautification area. In DI, we did not see a recovery in Q4 over Q3, as we saw in the other business units.
Year-on-year, the comparable revenue decline was at -35% for the quarter, driven by all segments and all regions, though with APAC seeing the strongest decline in comparable revenues. However, the revenue development improved sequentially with a comparable growth of 8.2% versus previous quarter three, due a strong development at Fluence. Let's now move on to the EBITDA side and to slide 12. The adjusted EBITDA in quarter four of the current fiscal year came in at EUR 71 million in absolute terms, translating into a margin of 9.6%. As you can see, thanks to our early corona mitigation measures, we were able to keep our margin nearly flat compared to quarter four in the previous year. We saw positive impacts from productivity overcompensating price erosion and inflation by EUR 14 million, as well as from an improvement in functional costs.
In the fourth quarter, we had a positive impact on EBITDA by applying IFRS 16 of about EUR 13 million. However, these positive effects were not able to compensate the negative volume and regression effect of -EUR 61 million. Coming to the segments. In the Opto reporting segment, the adjusted EBITDA improved compared to prior year quarter four to a remarkable 21.3%. This was mainly driven by an improved operational performance, product portfolio improvements, as well as lower functional costs. The adjusted EBITDA margin in the AM reporting segment with 5.5% came in quite flat compared to prior year level, which was at 5.8%. Negative effects from volume, price, and inflation were offset by productivity savings. The OSRAM Continental subsidiary, however, continued to be dilutive in the quarter and the adjusted EBITDA stayed negative. Last but not least, the profitability of DI.
The adjusted EBITDA margin was below the strong previous year quarter and came in -4.2%. This deterioration was mainly driven by the COVID-19 impact and therefore lower volume. Productivity and strict cost management reduced bottom line, the impact of COVID-19 crisis. Adjusted EBITDA in corporate items for OSRAM was negative with EUR -12 million. Let's now move on to page 13, to the free cash flow. The free cash flow was, in the quarter four, negative with EUR -52 million. For the fiscal year in total, it was positive, as mentioned before. CapEx were up at EUR 32 million after very low levels over the past quarters. In the previous quarter, during these times of the COVID-19 pandemic, followed by a general economic slowdown, geopolitical uncertainties and limited visibility, it is crucial for us to focus on cash and liquidity.
As you can see in the bar chart on the lower right side, our available liquidity in terms of cash and undrawn lines amounts to EUR 696 million as of September 30 this year. Undrawn credit lines apply to the revolving credit facility granted from us by ams AG as a shareholder loan. Cash of EUR 321 million was lower compared to the previous quarters as a result of partial use of cash to repay bank debt, triggered by the change of control with ams AG. The cash and undrawn credit facility together are with a total of EUR 696 million on a similar and comfortable level compared to previous quarters. The summary for the key financials. Let's have a look on the total on slide 14. Overall, our top and bottom line development was strongly impacted by the global consequences of the COVID-19 pandemic.
Thanks to our cost-cutting programs and our early implemented measures, we were able to mitigate those effects partially. Revenue for the OSRAM Group declined by - 13.8% and came in at EUR 3 billion. This translated into a adjusted EBITDA of 8.3% for the year, in line with our revised guidance in September. Adjusted EBITDA in absolute terms came in at EUR 253 million, mainly impacted by the decline in volume. Our productivity gains were able to offset effects from price and inflation to a large extent. In fiscal year 2020, we had an increase of EBITDA by applying IFRS 16 of about EUR 54 million. Let's have a closer look on the revenue development in the regions. EMEA was hit hardest with a decline of - 17.1% for fiscal year 2020. This was driven by all business units, with AM and DI experiencing the biggest decline.
APAC declined by -10.5%, mainly impacted by DI, and therein by their businesses in China. Overall, China declined only by a mid-single digit. Our business in the Americas showed a substantial decline of -13.9% for fiscal year 2020. Within Americas, our Opto business experienced the biggest decline of more than 20%. All our business units were impacted by the consequences of the pandemic. However, especially in the Opto segment, we were able to mitigate the effects on the bottom line, resulting in an EBITDA margin for OS of 20.1%, and thus even 280 basis points above previous year. Our Automotive business was, of course, affected by the weak development of the automotive market, as well as the dilutive impact of OSRAM Continental, resulting in a margin of 4.8%. As already mentioned, DI was hit hardest, mainly due to entertainment and city beautification.
The adjusted EBITDA margin for the DI segment came in at - 3.8% for the full year. With that, I would like to hand over to Olaf for the outlook.
Thank you, Kathrin. Coming to our last page and then to your questions, I move on slide number 15 and the outlook for fiscal year 2021. Regarding the further economic recovery, we are cautiously optimistic for many of our key markets. Actual orders, as I said, for the first two quarters are quite promising. We can therefore confirm our outlook for the new fiscal year published at the end of September. For fiscal year 2021, we expect a comparable revenue growth of 6%-10%. An adjusted EBITDA margin between 9% and 11%, and the balanced free cash flow and might optimistically up to a double-digit million EUR figure. Please note that this forecast is based on the assumption that the effects of COVID-19 will be overcome during fiscal year 2021. Something I think we are all hoping for. With this, I hand back to Julia.
Thank you. We do now open the Q&A session.
Ladies and gentlemen, at this time, we'll begin the question-and-answer session. Anyone who wishes to ask a question may press star followed by one on their touch-tone telephone. To withdraw from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. In the interest of time, please limit yourself to two questions only. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. First question is from the line of Sandeep Deshpande from JP Morgan.
Yeah. Hi.
Please go ahead.
Yeah. Hi. Thanks for letting me on. Olaf, two questions from me. Firstly, on the numbers itself that you reported. You have now moved OSRAM Continental into a move for sale or whatever. They moved out separately. Can we understand the full year numbers? What kind of loss or profit was reported for OSRAM Continental? Was it not there in the numbers at all as you have reported today? That's my first question. Second question is on the backlighting business you've mentioned, your entry into the MicroLED and then, sorry, Mini LED, then MicroLED. Historically, as I remember in your presentations, backlighting was not a focus for OSRAM. Is this a new focus that you want to be in this market? Historically, pricing pressure in this market has been considerable. Finally, a quick one on the current environment.
Have you seen any changes in the current environment, orders or sales to customers because of the new lockdowns in Europe, et cetera?
Mm-hmm. I will start with question number two and three, and then I give it for the OSRAM Conti to Kathrin. Let me start with the backlighting Micro and Mini. Now, the reason why I put it in for you was because I have seen now so many reports talking about MicroLED and many authors, especially the press, is confused between Micro and Mini. To make it clear, there is no single MicroLED in the market today, and there will be no single MicroLED next year. To make it clear, many people are confused from Micro and Mini, and that was the reason to show a little bit the progress between the traditional LED, the Mini LED, which is coming up now, is just started in production by OSRAM in Kulim, and then the MicroLED is coming later on.
That was only to help you a little bit to give you an overview and not mix Micro and Mini. The second point is, are we interested to going in the backlighting business? No. We are not producing television, but the Micro and especially the Mini LED and the MicroLED are very interesting for displays. These kind of LEDs will replace the OLED. For this reason, many people call the MicroLED OLED killer because, today, in smaller displays and in higher displays, but let me talk about smaller displays and in automotive interior areas. Our interest is to deliver to automotive interior displays, smaller one. You see that more and more displays are coming up in a car, interior car. For this reason, the Micro and the Mini LED are very helpful because the accuracy and the lighting potential is very high.
Especially if you have any lighting from the sun with the traditional backlighting, that is at a disadvantage. In this area, there is a huge potential in the future. For this reason, we would like to be in this special area of, let me say, backlighting and applications for Automotive. The third question was the current environment. As I said, to give you a little bit an indication, you are right, Sandeep, that usually OSRAM is an early indicator for many things. I have a strong order book for the Q1 and Q2. That surprised me, especially in Automotive LEDs. That means that today, still in November, there is no impact from the current lockdown visible for us. If I compare the book-to-bill from this year to last year, we have a much better situation.
Today, in the current environment, I do not see weak signals for pandemic decline in the business. It is the opposite. People love to drive cars. They don't like to use public transportation. In North America, people are not willing to fly or to take the train or the Greyhound bus. They are using cars. The demand, especially in driving mileages, are increasing. There's a clear correlation between driving a car mileage and change of halogen lamps. We are more or less sold out in North America, and we have a very good order book for halogen aftermarket business in North America. The same is a little bit in China. People love to have their own car. You see it, by the way, here in Munich as well. Streets are full, but public transportation is empty. The third question is coming to you.
The first question, in fact, Sandeep, thank you for that, regarding the OSRAM Continental joint venture. As in the previous fiscal year, the revenue amounted to roughly EUR 220 million, and we continue to have a negative EBITDA margin, and therefore, that's dilutive for Automotive of approximately 20%. As a result, at the end of the day, there was also a negative free cash flow deriving from that activity.
Sandeep, is it okay?
Sorry, my question. That OSRAM Continental, it's about EUR 40 million negative EBITDA. Is the dilution what you're saying?
Thank you.
Approximately, yeah.
Thank you.
Thanks for your questions. The next question comes through the line of Sebastian Growe from Commerzbank. Please go ahead.
Yes. Hi, good afternoon. Can you hear me?
Yeah.
Very good. Just double-checking. Right. The first one would be on the outlook, if I may. It's implying about a 20%-40% contribution margin based on my calculation. Against that background, how should we think about the growth by divisions when I'm looking at your 6%-10% organic growth guidance? Any potential currency impact that you might have baked into that margin guidance, cost inflation? Any color on sort of the moving parts would be very much appreciated. The second question is around portfolio. Digital, I would assume, has suffered pretty much from especially the Claypaky stage entertainment lockdown situation.
Can you give us a bit of sense how much sort of the traditional specialty lighting, which was moved into the Digital division, kind of created this EUR 30 million EBITDA loss, and how much is really related then to all other activities within Digital? If I may follow up quickly on the prior question around the Conti JV. Could you just update us on the overall process? What is intended, the timeline, and what is sort of the exit route? Is there anything here?
Maybe I start with the OSRAM Continental since I was just answering that question. It's still the same timeline as we envisaged. We intend to unwind the two businesses, I think that's a term for it, by the end of the next fiscal year, meaning by September of 2021. That's still the idea. The idea is also unchanged that the parties have agreed on what activities exactly they are basically taking along the lines from what they brought and integrated in that business when it was first established. There's a lot of details to work on, and especially it's the customer orders which need to be complied with and fulfilled, and that's the most important question.
No changes, and it's as we envisaged, and that's why you also will find an impairment for the quarter four in our numbers, because all of that has been anticipated and impaired.
I'm coming to question number two and number one about planning assumptions that Gerhard will help us a little bit to come through. Portfolio, the DI, we had a huge impact, Sebastian, on entertainment lamps and Claypaky. The decline is up to 95%. That means there are no single entertainment lamps we can sell, more or less. It's really a little bit replacement. As you know, all cinemas worldwide are closed, all theaters are closed, opera is closed. Any shows are very limited. The entertainment is really absolutely down. The biggest losses came clearly from entertainment. We have positive results from horticulture. Our company, Fluence, are running quite well. Horticulture is still growing in turnover, revenue, and profitability. As you know, local for local, the people love to reduce transportation and produce fruits and products local. For this reason, the horticulture by Fluence is running quite good.
The last one is that we have losses in Europe for controls. And we have more or less zero profitability for controls in North America. Overall, the biggest impact came from entertainment, and for this reason that we have the losses, what Kathrin explained. Maybe coming to some of the planning assumptions for the outlook. If I remember your question, please correct me. It was a question, what kind of EUR we have in sight and what is the price decrease? Maybe Kathrin, we can try to manage it.
Well, regarding the foreign exchange assumption behind the business plan, we are still calculating on the basis of 1.17. That's basically where we are today. As always, in OSRAM, we generally are expecting pressure on margins and therefore, we are basically looking at margin decline. That's why we are constantly improving our cost structure in order to work against that. That's the same as it has been all the time. Therefore, for the next year, we are very confident that our productivity gains will exceed the pressure on the prices. That's it. Any other questions?
Thanks for your questions. As a reminder, if you'd like to ask a question, please press star followed by one. The next question is from the line of Juergen Wagner from MainFirst. Please go ahead.
Yeah, good afternoon. Thank you. A follow-up question on page eight or slide eight. Last time you showed us a slide on MicroLEDs. I think you, in terms of time frame, you rather mentioned 2023, 2024. As you are buying or intend to supply auto, if they tend to be rather slow for a new technology. What is driving that early adoption? You gave us a free cash flow guidance. You also said orders for the first half are very strong. Should we look at negative free cash flow as you build or as you grow first half and then positive in the second half? Thank you.
Coming to your first question with MicroLED. What is maybe a little bit changed, but again, it's a range of 2022-2024. What is maybe changed is that from the technology point of view, the issue with the MicroLED was never the development of OSRAM for the MicroLED. This is finished. The issue is to pick the LED and bring it to a wafer. The biggest issue was in the past that we have to find a solution with the right machines to pick the LED and bring it to a wafer. It seems to be that this is getting now much better, and we expect to be a little bit faster. That's the reason I said it could be 2023, 2022, 2023 instead of 2024. That's now our latest proposal for the MicroLED.
That was the reason that I bring this down. As I said, the biggest one was to explain a little bit the difference between Mini and Micro. The second question is coming up, that we expect, again, as I said, a strong order entry. We had a strong turnover and order in Q4, and you have seen that our receivables increased. You see that on the charts of Kathrin, that increased to EUR 73 million alone, receivable. I expect that this receivable will change to cash, if Kathrin is tough enough, and she is it, to bring us this receivable to our cash position. I expect a good free cash flow for Q1. For this reason, I do not see an issue in that area.
Thanks for your questions. Ladies and gentlemen, if you'd like to ask any more questions, please press star followed by one on your touch tone telephone. We have a follow-up question from the line of Sandeep Deshpande from JPMorgan. Please go ahead.
Thanks for letting me on again. Two quick follow-ups. Firstly, on again, the OSRAM Conti JV. This so-called wind down of the JV, will there be a cash cost to OSRAM associated with it? Do you have an estimate on how much it would cost to do this? The second question I have overall is, now with the Domination Agreement with ams, are you already working with ams on joint products, whether in LiDAR or any other business unit? How quickly will they produce revenues? Thank you.
Okay. I would recommend that Kathrin is starting, and then I'm coming to the Domination.
There are no costs attached which hadn't been reflected in this year's impairment, therefore, all we're looking at next year will be the operative.
Continuing, unfortunately, loss situation, which is already included in our prognosis. There are no additional one-offs. That was, I think, the question.
Coming to your second question, Domination Agreement, joint products. We just started to think about a roadmap. As you know, OSRAM is strong in emitter, in LEDs, in visible light, invisible light, ams is strong in sensors and for optics. I think the combination of emitter, sensors, optics, bring us really to the vision to be a market leader and world market leader in photonics, illumination, and sensing. We are working on new products as a combination of both core competency. Again, we are on roadmaps and not on actual developments today. We would like to wait if we have this Domination Agreement is officially valid. That we expect in the beginning of the year 2021. Then we are really starting together in the development of new products.
Thanks for your questions. There are no further questions at this time. I would like to hand back to Julia Klostermann for closing remarks. Please go ahead. Thank you.
Thank you very much for your participation. With that, we would like to close this conference call. If you do have further questions, please get in contact with our investor relations team. Thank you and goodbye.
Bye.
Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.