• OSRAM

Interview Dr. Berlien

OSRAM CEO Dr. Olaf Berlien answers questions from analysts, employees and customers

Lucie A. Carrier, Equity Analyst, Morgan Stanley Research_
You have now been CEO of OSRAM for almost two years. In what ways have you succeeded in further increasing shareholder value?

Over the past 24 months, we have made the most significant strategic changes in the Company’s history with great success. We have a second successive record year under our belts and have put OSRAM back on the path to growth. To do this, we launched the Diamond innovation and growth initiative in the past year. At the same time, we got a sizable company with €2 billion in revenue up and running within a very short space of time by separating and selling of the lamps business. After carving out this business, which now operates under the name LEDVANCE, we were once again able to position the remainder of the business as a high-tech group under the OSRAM brand. However, the success of our chosen course becomes evident when taking a detailed look at the individual divisions. For example, revenue grew by well in excess of 10% in the premium LED business. All in all, the sale of the lamps business will enable OSRAM to accelerate its growth and become more profitable.

Dr. Olaf Berlien,
who holds a PhD in business administration, has served as Chairman of the Managing Board and CEO of OSRAM LICHT AG since January 2015.

Sebastian Growe, Analyst Industrials, Commerzbank_
While Opto Semiconductors (OS) provides OSRAM with extremely strong positioning and attractive margins, particularly in the automotive/industry end markets, General Illumination (GI) continues to record significant losses. Against this backdrop, aren’t investments in the LED chip factory in Kulim, Malaysia, a little too risky?

Together with the sale of the lamps business, investing in Kulim was one of our key strategic decisions in recent years, and we stand by it wholeheartedly. Our facility in Malaysia places us in pole position in the LED market, as it enables us to produce higher-quality goods more effectively and more cheaply than our competitors in Asia. We are opening up additional markets in general LED lighting and becoming LED cost leaders. At the same time, we are also continuing to grow in the premium LED segment, investing in new technologies such as laser light and constantly expanding our technological expertise. All of this demonstrates that OSRAM’s growth rests on several pillars – and the major investment in Kulim is an integral part of that.

“Innovation helps us to offer our customers the very best quality and to reinforce our position.”

Dr. Olaf Berlien

Peter Reilly, Equity Analyst, Jefferies_
It has been an eventful year for OSRAM, with disputes with Siemens, changes to the Managing Board and the decision to build the chip factory in Kulim. Can stakeholders expect a calmer year in 2017?

There is no question that we have experienced some turbulent times. The lighting market is moving fast, and if you’re not moving forward, you’re moving backward. That’s why we opted for a bold, decisive and sustainable reorganization of the Group with a clear 5.1.5 target for 2020. That means over €5 billion in revenue, up to €1 billion in profit (EBITDA) and earnings per share of around €5.00. The good news is that our three-pillar strategy and Diamond initiative provide us with a framework within which we can continue to grow until 2020.

Lisa Huber, Student Trainee, LS SMK MARCOM_
How important is sustainability to you?

As a leading provider in the global lighting industry, our strategic decisions are based on an integrated concept consisting of the three pillars of sustainability: economy, environment and society. These provide a holistic framework for our thoughts and actions. We place particular emphasis on environmental issues. Firstly, OSRAM makes an active and highly efficient contribution to the issue of environmental protection through its products. Today’s smart lighting systems and modern luminaires require a fraction of the energy consumed by conventional lighting just a few years ago. Another factor is our environmentally-aware production processes. At OSRAM, environmental management includes the sustainable use of energy, water, waste and chemicals as well as the monitoring of emissions. The strategic importance of sustainability is also reflected in the behavior of investors, who increasingly count the issue as one of their decision-making criteria. Our concept pays off in this regard, as our repeated inclusion in the most important sustainability index, the Dow Jones Sustainability World Index, proves.

 
OSRAM’s three-pillar strategy
Opto Semiconductors

OSRAM aims to significantly reinforce its market position in the LED components market, both in general lighting as well as in specialty automotive and industrial markets.

Specialty
Lighting

In this business unit, OSRAM bundles lighting technology for specialized applications such as automotive or entertainment – ranging from halogen headlamps to laser modules..

Lighting Solutions and Systems

The company aims to further expand its offering of intelligent, technologically advanced lighting solutions. On top of the luminaires and systems business, there will be an increasing emphasis on software competency.

Michaela Kupfer, Student Trainee, OS Strategic Marketing & Planning / Communication_
In recent years, OSRAM has been somewhat synonymous with restructuring and uncertainty. Why should I strive to secure my first permanent job with you?

For us, efficiency is not an end in itself but the only way to grow in the fast-moving lighting market. That’s why there should be no limits on our thinking; each and every division must be sustainably profitable. While we firmly believe that a company can only be an attractive employer if it is healthy and profitable, we also know that our employees and their innovative spirit are our most important assets. That is why we are confident that OSRAM is on the right track. With this in mind, you should certainly apply for a permanent position with us. We can only grow with your help – and we will do all we can to ensure that you can succeed with us.

Antonio Marino, Sales & Marketing, Italy_
Isn’t OSRAM losing a part of its soul by selling the lamps business?

OSRAM’s tradition is not simply about making lamps. The company has always been good at designing and successfully marketing well-engineered, high-quality lighting technologies. A hundred years ago, this meant lamps. Today it means digital lighting, and that’s why we are now committed to this field. With our three pillars of Specialty Lighting, Lighting Solutions & Systems and Opto Semiconductors, we are working to build a stable future for our Company – and we are proud to offer one of the most innovative lighting concepts in today’s market. By doing this, we are continuing our tradition as an innovative lighting company. Let me add a few more words on the sale. We know it was painful for many people. But as much as we are convinced that it was absolutely strategically necessary, we are also convinced that the lamps business is being placed in good hands. The consortium of buyers consists of reliable companies who will expand the business.

Dr. Frank Schmid, Head of System Engineering, Diehl Aerospace GmbH_
What are you doing to remain at the forefront of innovation?

Innovation helps us to offer our customers the very best quality and to reinforce our position. We listen very carefully to our customers’ needs, which means strengthening our research and development efforts with higher levels of investment. Specifically, this means we are forging ahead with our efforts to develop laser light technologies, for example. We are investing in the growth and innovation market of premium LEDs used in the field of visualization, whether in virtual reality or iris recognition. Last but not least, we have also been able to strengthen our position in the US market by acquiring Novità Technologies. In short, we are ideally positioned when it comes to innovation.

Gerd Bahnmüller, Vice President Research and Development, Automotive Lighting_
How can you keep pace with your competitors in all areas – particularly with regard to lighting design?

We have led the way in the automotive lighting segment for many years, delivering the best products and highest quality to our customers around the world. We have also spent many years working intensively with reliable partners. For example, OSRAM is currently the only company in the world to deliver series production-ready laser modules for front headlamps to the market. Several automobile manufacturers are working with us in this area to establish this technology within vehicle lighting, and demand for laser systems is steadily rising.

We have been developing and producing ‘matrix headlamps’ for a number of automobile manufacturers for several years. This technology allows drivers to have their high beam constantly activated without dazzling oncoming traffic. Despite still being a technology of the future, another growth market is that of ‘assisted driving’ and, in the medium term, self-driving cars. This technology relies on high-performance optical sensors and will take vehicle lighting in a new direction. This upcoming technology opens up interesting new perspectives for our customers and partners.

Christoph Lay, LayInnenarchitekten_
What added value will lighting bring us in buildings in future?

We will focus even more strongly on the requirements of ‘smart cities’ and ‘smart buildings’ and meet the growing need for networked and intelligent lighting solutions. OSRAM has already repeatedly demonstrated its expertise in such projects. Striking examples include the lighting in the Sistine Chapel or at Marienplatz square here in Munich. Another beacon project – in the truest sense of the word – is the illumination of the Shanghai Tower. Our light control uses 22,000 LEDs to turn one of the world’s tallest buildings into a landmark that is visible for miles around. Nevertheless, there is still much to be done, which is why we have launched the ambitious LS 800 growth program. This initiative aims to double revenue and achieve a profit margin of 8% by 2020.