Osram Licht AG (OSRD)

[Enterprising Investor]

Osram to Slash 7,800 Jobs (7/29/14)

German lighting manufacturer Osram Licht AG plans to shed roughly 7,800 jobs at home and abroad through 2017, as the company cuts costs.

"The measures are necessary against the backdrop of the rapidly declining market for traditional products in general illumination," Osram said. "The decline accelerated yet again in the third quarter of the current fiscal year 2014." The company's fiscal years end in September.

Starting in the 2015 fiscal year, the restructuring steps aim to lower the company's annual cost base by about €260 million, or roughly $350 million, by the end of fiscal year 2017. Osram said the measures are expected to cost €450 million over that three-year period and start once talks with labor representatives have been completed.

The restructuring will mainly affect manufacturing activities for traditional products in general illumination, sales, administration and other functions.

Of the 7,800 jobs, 6,100 will be cut abroad and the remainder in Germany. Roughly 22% of the company's 35,000 employees will be affected.

Osram also confirmed its full-year guidance for fiscal year 2014 and said it aims for a margin of above 8% in earnings before interest, taxes and amortization over the business cycle from fiscal 2015 onward. In fiscal 2015, the Ebita margin could be below 8%, depending on how fast the measures will be implemented and to what extent the restructuring costs will damp earnings, the Munich-based company said.

Net profit for the fiscal third quarter ended in June totaled €43 million, more than three times the company's year-earlier net profit of €11.7 million.

Group revenue fell 6% to €1.2 billion. Revenue declined 19% in the Classic Lamps & Ballasts segment and 16% in the Luminaires & Solutions business. LED Lamps & Systems posted a 60% gain in revenue.

http://online.wsj.com/articles/osram-announces-cost-cuts-job-cuts-1406661770