OSRAM New CEO: Accelerating Structural Adjustment

Olaf Berlien, the new CEO of OSRAM in January 2015, said recently that OSRAM will not gain the leading edge by selling its automotive lighting and LED chip manufacturing business in order to follow its rival Philips. OSRAM spins off its automotive and LED chip business. meaningful".

Both companies are competing for the industry's position in responding to the dramatic changes brought about by the emergence of LED-based solid-state lighting technology. In the press release issued in the first quarter 2015 financial report, Berlien will also be in the case of a reporter's question as if it were split up by Philips. Said: "This is not logical. This is two different companies. From the perspective of Philips, the spin-off may be completely normal, but I do not understand why OSRAM should also be split up like this."

Osram also announced that in the latest quarterly earnings report, LED-related products have accounted for 39% of revenue, a record high. In the quarterly report, total sales of 1.4 billion euros have increased by 5% compared to the same period of last year, partly due to the weak euro and acquisition of entertainment lighting company Clay Paky, with a profit of 151 million euros and a profit increase of 23%.

Like Philips, OSRAM is also undergoing a change to adjust to the new reality of LED lighting, Berlien said, the market is changing "almost every day." In November last year, Osram stated that it would cut 7,800 jobs, mainly in traditional lighting, such as a large glass manufacturing plant in Augsburg. Although the factory in Augsburg is well managed, market demand is shrinking as consumers switch to more efficient alternatives, replacing the traditional lighting technology with LED replacement once every ten years. OSRAM will try to readjust its business and turn to Higher-margin LED lighting.

"We want to rebuild our company. Maybe we must be faster," Berlien told reporters.

In the first quarter, traditional lighting business of OSRAM traditional lamps and ballasts decreased by 8% compared to the same period of last year to 505 million euros. Due to reorganization costs, net profit was 58 million euros, down from 68 million last year. The euro, but exceeding market expectations, also increased OSRAM’s overall profit to 151 million euros, which is higher than the previous forecast of 127 million euros.

At the same time sales of LED-based lamps and systems jumped more than 70% to 162 million euros. OSRAM Opto Semiconductors, a subsidiary of OSRAM, also announced a 9% increase, which was 295 million euros. These all show that the acceleration of change also requires the company to further adjust the plan. Berlien hinted that there will be more action in the coming months.

OSRAM's corporate restructuring plan cost €184 million, which was mainly used for layoffs in the European region, resulting in a net loss of 39 million euros. OSRAM said that about two-thirds of the annual estimated total restructuring costs are spent in the first quarter.

“The excellent financial data in the first quarter marks the beginning of a successful new fiscal year,” said Berlien. “But we can't stop at what we have achieved. We will continue our transformation and will announce our strategy in the spring. Plan.” Osram also reiterated that the 2014/15 adjusted EBITA profitability was comparable to the previous year. However, as restructuring costs and reform measures (still some unpublished) are further increased after cutting thousands of jobs, net profit will drop sharply.