Osram Names Berlien as Chief Executive to Replace Dehen

Osram Licht AG named Olaf Berlien as new chief executive officer after his predecessor at the second-biggest lighting company underestimated the pace of an industry shift from traditional light bulbs to light-emitting diodes.

Berlien will replace Wolfgang Dehen, who will step down from the executive board and all other positions within the group “on his own request,” Osram said in a statement yesterday. Berlien, who will take over in January, will also be chief technology officer. The stock gained as much as 3.8 percent in Frankfurt trading today.

Osram, whose shares had dropped 31 percent before today since the start of 2014, was spun off last year from Siemens AG as part of a program by Europe’s largest engineering company to divest units with profitability or growth potential it deems inadequate. Osram in May cut a sales target for the 12 months through September, saying revenue would remain flat or at best increase moderately.

The boom in demand for LEDs -- which are smaller, more energy-efficient and have longer lifespans than traditional light bulbs -- are forcing market leaders Royal Philips NV and Osram to adapt. The companies now seek long-term contracts to install complex lighting systems to generate additional sales.

Dutch rival Philips in September said it will split off its lighting unit as it focuses on health-care equipment and consumer goods, echoing the move by Siemens.

Job Cuts

In July, Osram said it will cut an additional 7,800 jobs amid a faster-than-expected decline in sales of traditional bulbs. The cuts added to an older plan to scrap 8,700 positions. Dehen said at the time that the company needed a cost structure that is appropriate to the size of the company.

Osram said yesterday that it reached its targets for the fiscal year that ended in September as sales rose 1 percent, excluding portfolio and currency effects, to more than 5.1 billion euros. Earnings before interest, taxes, amortization and other items increased “almost ten percent” to 449 million euros.

For the 12 months through September 2015, the company forecast sales to be little changed. Earnings on a reported basis are predicted to “sharply decrease due to the accelerated implementation of the transformation program in fiscal 2015.”

The company aims to pay a dividend of 90 cents per share and also plans a stable dividend for fiscal 2015.

Berlien, who started his career at International Business Machines Corp. and holds a doctorate degree from the Technical University Berlin, is currently CEO of engineering and construction company M+W Group GmbH. Previously he worked as CEO of ThyssenKrupp AG’s technologies division.

“With Olaf Berlien, we were able to recruit a manager and strategist who has a comprehensive expertise with regard to rapidly changing technological markets,” said Osram supervisory board chairman Peter Bauer.

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