Osram steps away from lamps, focuses on the auto business image

German lighting manufacturer Osram is planning to transfer its $2.5 billion lamps business into an independent legal structure in order to focus on automotive lighting and components.

This move follows a similar one made by its Dutch rival, cheap Philips, purchase Osram separating a declining business that stands for 40% of its revenue. The change led to a more than a 6% increase in the Osram share to a best so far of 51.30 Euros. The transfer will draw away Osram’s traditional lightbulb and LED general lamps units, leaving the company with specialty lighting and components designated mostly for the automotive sector and also project lighting. Osram is trying to keep up with a fast growth in Asian LED digital light makers who provide cheaper prices for their products due to fewer overheads than legacy lighting manufacturers in Europe and the U.S.

Osram CEO, Olaf Berlien took the helm of the company in January and has been planning a strategy ever since, saying that the move will be submitted to the German brand’s supervisory board on an upcoming meeting at the end of April. Karsten Iltgen, analyst at Bankhaus Lampe said that “It certainly makes a lot of sense. It’s what we wanted from the company, to focus not only but especially on automotive, where they can definitely get more value.” Osram registered last year a drop of 15% in its traditional lighting unit sales to 1.96 billion Euros, with a 4.6% for the unit’s margin on earnings before interest, tax and amortization, in comparison to a 6% for the group.

By Gabriela Florea