German lighting giant Osram announced it will be spinning off its general lighting business including general LED lighting into an independent company. Osram Lamp
According to the company statement: “This business includes the traditional as well as the LED-based lamps of the current business units CLB and LLS. The measure is to be submitted to the Supervisory Board at its next regular meeting on April 28, 2016. In fiscal 2013/14 this business generated worldwide sales of about EUR 2 billion (US $2.15 billion). The independent legal structure is to provide the basis for the further development of the business, while also considering partnerships.”
The declining general lighting business represents 40% of the company’s revenue, reported Reuters.
By parting with its general lighting business, Osram will be able to focus on its specialty lighting and components for automotive sector and project lighting.
Osram and Philips have been trying to keep up pace with rapidly rising Asian LED lighting manufacturers, and the two companies have been implementing similar business strategies in the past year by spinning off less profitable general lighting businesses.
By focusing on the automotive lighting market, Osram would be able to get the most value, said Karsten Iltgen, Analyst at Bankhaus.
The value of Osram’s remaining business was projected to fetch a higher share value of EUR 50, and the remaining general lighting business EUR 10, compared with the price of EUR 49.13 before, said Iltgen.
Sales of Osram’s traditional lighting unit, CLB, have downed 15% in 2014 to EUR 1.96 billion, and its EBITDA was a lower 4.6% compared to the group’s 6.0%.
