As LEDs proliferate, Osram to eliminate 7800 jobs due to traditional lighting declines
Although Osram (Munich, Germany) will eliminate 7800 jobs, fiscal Q3 2014 declines in its traditional generalillumination business were almost offset by substantial gains for its light-emitting diode (LED)-based solid-state lighting (SSL) products on a comparable basis. On this basis--meaning excluding portfolio and currency effects--revenue dropped slightly by 1% year-on-year and was around $1.6 billion dollars.
The LED-based products business recorded a comparable revenue increase of 21% in Q3 and had a share of 38% of consolidated group revenue. Osram confirms the recently updated outlook for the current fiscal year. Osram says the associated capacity adjustments of about 7800 positions worldwide over the next three fiscal years are planned to be implemented in a socially responsible way.
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"While earnings continue to develop nicely, the growing market acceptance of LED technology is, as already announced, causing a significantly faster decline of the traditional business," said Wolfgang Dehen, CEO of OSRAM Licht AG. "We will successfully complete the first stage of OSRAM Push shortly. However, we have always stressed that the transformation of the lighting market will also continue after 2014 and that it will require additional capacity adjustments. Against the backdrop of the latest developments, additional measures are now necessary to safeguard our position as a leading lighting manufacturer in the long term. We need to be even closer to the customer, further strengthen the entrepreneurship of our segments and at the same time create cost structures that are appropriate to the size of the company, but also to that of its individual businesses."
Over a period of three years, around 1700 domestic positions and around 6100 international positions will be affected. In total, the measures are intended to lead to a permanent cost reduction of about $350 million dollars until the end of the fiscal year 2017.
Osram's opto-semiconductor components reporting segment (Opto Semiconductors, or OS) recorded a comparable revenue increase of 5% compared with the year-earlier period, which had already been very good. Specialty Lighting (SP), with its Automotive Lighting and Display/Optics units, continued to benefit from rising demand in the automotive segment and achieved a comparable revenue increase of 10%. The LED Lamps & Systems (LLS) reporting segment covers the business with LED lamps, light engines as well as LED drivers. It recorded comparable revenue growth of 68% in Q3 due to the fast-growing LED demand.
The Luminaires & Solutions (LS) reporting segment comprises luminaires for professional customers, products for consumers, as well as the service and solutions business. LS recorded a sales decline of 13% on a comparable basis in Q3 due to the reorganization of the service business in North America. Thanks to strong growth from LED-based luminaires, the luminaires business posted a comparable revenue increase.
The company confirms the outlook for fiscal 2014 that was updated at the end of May. The Managing Board still expects revenues on last year's level, at best a modest revenue increase, on a comparable basis.
Osram's LED lamp portfolio will see a year-on-year increase of 50% to more than 90 models for the coming lighting season. The expansion is supported by the new platform production approach in which identical modules are used in different lamps. Osram is also gaining further momentum regarding laser automotive lighting: With the BMWi8 and Audi R8 LMX, there are now two cars available that contain an Osram laser light module. And the Opto Semiconductors segment developed a multi-chip laser for the first time. This product considerably reduces the complexity of laser projectors while at the same time providing far greater luminosity than conventional models.