Siemens’ Osram Unit Sells China Plant With 2,000 Employees

Siemens AG (SIE)’s underperforming Osram lighting unit agreed to sell a plant in Shaoxing, China as it streamlines operations and focuses on light-emitting diodes lamps ahead of listing its shares publicly.

Super Trend Lighting Ltd is buying the factory, which manufactures predominantly traditional lamps and has around 2,000 employees, the Munich-based company said in an e-mailed statement. It didn’t give a value for the deal.

Osram tries to better capture growth in an industry moving from traditional bulbs to LEDs and is cutting as many as 8,000 jobs, partially through plant sales. The company, which is meanwhile investing 100 million euros ($130 million) in the construction of a new LED assembly plant in the Chinese province of Jiangsu, has said that the restructuring measures will cost a mid-three digit million figure through 2014.

“The sale marks a further milestone in the realignment of the company,” Osram Chief Executive Officer Wolfgang Dehen said today. “Our focus is on profitable growth and we plan to further increase the share of LED-based revenue of our overall business.”

Siemens shareholders approved the spinoff of Osram in January after the company canceled a plan for an initial public offering of the business last year after realizing that investments to keep pace in the lighting market would be too great to shoulder. Siemens investors will receive one Osram share for every 10 shares they own.

Trailing Philips

Siemens trails Royal Philips Electronics NV (PHIA) in the market for lighting, which is tilting toward LED technology based on semiconductors. Philips, based in Amsterdam, has also also deepened job cuts at lighting facilities, and the company announced reductions at a factory in Belgium last year.

Siemens last year estimated the total lighting market will grow by about 5 percent each year to 2016, with the LED market volume to quadruple by then to 37 billion euros, according to figures compiled by McKinsey & Co. The market for traditional lighting products will fall by 15 percent in that time, the data show.

Osram posted a profit of 79 million euros in the last quarter, compared with 111 million last year.

Siemens, whose shares last year returned only one third of the German DAX benchmark index’s advance, earmarked units such as airport luggage systems, mail automation and water technology for disposal and is also combing through its portfolio to weed out more laggards.

Today, Siemens dropped 0.5 percent to 81.61 euros as of 9:55 a.m. in Frankfurt, valuing the company at 71.9 billion euros.

To contact the reporter on this story: Alex Webb in Munich at awebb25@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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