* Osram announces second major cost-cutting programme
* Says compulsory redundancies not ruled out
* To shut more factories, cut almost 8,000 more jobs
* Shares drop more than 5 percent to bottom of MDAX
(Adds CEO comment on pricing, background)
By Maria Sheahan
FRANKFURT, July 30 Germany's Osram Licht AG
expects to cut more jobs in future as customers switch
to new lighting technologies such as LEDs more quickly than
expected, its chief executive said, a day after unveiling plans
for almost 8,000 job losses.
"We always said that the decline of the market for
traditional general lighting will continue. That means that we
will take measures even beyond what we announced," Wolfgang
Dehen told journalists during a conference call on Wednesday,
adding he could not yet say how many more jobs could go.
Light-emitting diodes (LEDs) are rapidly gaining in
popularity as they are more energy efficient and longer-lasting
than traditional lighting such as incandescent bulbs, and as a
price war among manufacturers makes LED technology more
Osram has struggled to adapt to the shift and announced its
second major savings drive late on Tuesday, bringing its overall
headcount reduction to almost 17,000, and said it would shut
In its fiscal third quarter through end-June, LED accounted
for 38 percent of group revenue, up from 31 percent a year
earlier and broadly in line with top rival Philips.
Osram's stock was down 5.4 percent to 32.235 euros, at the
bottom of Germany's mid-cap index, at 1245 GMT as
investors worried the restructuring would weigh on profits in
the coming years.
"All in all, the bad news appears to be out now," Kepler
Cheuvreux analyst Peter Olofsen said, while adding he couldn't
see an upside for Osram shares amid the radical industry shift.
The decline of traditional lighting sales at Osram
accelerated to 19 percent in its third quarter to the end of
June, from 13 percent in the second quarter.
"I think the whole industry is surprised by the fast decline
in traditional products," Osram CEO Dehen said.
Lighting makers are also grappling with a price war in the
LED market as chip-based technology has allowed new competitors
- such as South Korea's Samsung Electronics and
Japan's Toyoda Gosei - to grab market share.
According to research firm IHS Technology, the average
retail price of LED lamps was 11.8 percent lower in June 2014
than a year earlier.
Philips said last week it was speeding up the transformation
of its lighting business, which includes the spin-off of
lighting components, as quarterly sales of traditional lighting
products dropped by 13 percent.
Osram's management now faces tough negotiations with
powerful German labour union IG Metall over the 1,700 job cuts
planned for the company's German operations, as CEO Dehen said
compulsory redundancies could not be ruled out this time.
Osram, the top supplier for automotive and display lighting,
had 34,000 employees around the world at the end of June.
Osram's stock is still up a third from its listing last
year, when it was spun out of engineering group Siemens
, but has declined by more than a quarter over the
past six months as concern grew that further restructuring
measures would become necessary.
UBS cut its recommendation on Osram's stock to "neutral"
from "buy" on the prospect of three more years of restructuring
and said it would recommend a break-up of Osram to lift value
(Editing by Arno Schuetze and Mark Potter)