* To save 1 billion euros by 2015
* Most job cuts to come through plant sales
* Cost of restructuring in hundreds of million euros
(Adds comment from Osram, analyst, adds detail)
By Maria Sheahan and Jens Hack
FRANKFURT, Nov 30 German lightbulb maker Osram
will cut another 4,700 jobs, or 12 percent of its workforce, and
sell factories to compete with Asian rivals after being spun off
from parent company Siemens.
Osram, which has annual sales of about 5 billion euros ($6.5
billion), said on Friday it wanted to save 1 billion over three
years, with half the savings coming from procurement.
The firm, set to to be spun off in the spring, has been slow
to shift to light-emitting diodes (LED) from traditional
incandescent bulbs, while Asian rivals built up capacity and
drove down prices.
"We are entering the digital lighting age," Osram chief
executive Wolfgang Dehen said, adding new jobs created in the
LED field would not be enough to offset the decline in positions
in its traditional business.
Siemens itself is spinning off Osram, whose brand is 106
years old, as part of an overhaul of its business which includes
a 6 billion euro savings plan that will see it divest less
profitable businesses and focus on areas of core expertise.
To that end, Siemens said this week it was to pay 1.7
billion pounds ($2.8 billion) for the rail business of British
group Invensys to get better access to customers in
Australia, Britain, Spain, and the United States.
Siemens plans to give 80.5 percent of Osram to its
shareholders, keeping 17 percent of the business.
Osram aims to boost profitability by bringing new products
to market more quickly. It could also buy chips for mass-market
LED bulbs from rivals who can produce them more cheaply, while
focusing its investment on high-end technology.
LEDs, best known for their use in flat-screen televisions
and tablet PCs, are becoming increasingly popular as a source of
general lighting in shops or restaurants, for outdoor displays,
and for headlights in cars.
Consultancy McKinsey saw the LED market growing more than
sevenfold to almost 65 billion euros by 2020, accounting for the
bulk of global demand for lighting.
So far, only two of Osram's 44 factories in 16 countries
make LEDs - in Regensburg, Germany and Penang, Malaysia - but it
is building a new plant in China at a cost of over 100 million
euros to boost its presence in the fast-growing Asian market.
Meanwhile, newer players in lighting such as South Korean
groups LG Electronics and Samsung Electronics
are grabbing market share from traditional industry
leaders - General Electric, Philips and Osram.
"In the short term, this year and early next year, the
market environment (for LEDs) continues to be challenging," said
Jamie Fox, manager of the Lighting and LEDs area at IMS
Research, recently acquired by IHS.
The LED market had a volume of about $10.3 billion in 2011,
which IMS Research expected would grow to $13.5 billion in 2015.
Of the cuts announced on Friday, which are to take place by
2014, 4,300 will be outside Osram's home market. Half of that
figure will go via factory sales, Osram said. The 400 jobs to go
in Germany will be from Berlin, Munich and Wipperfuerth.
The move will bring its total headcount reduction since the
end of its fiscal year 2011, when it had a workforce of 41,000,
to as much as 8,000.
Osram said costs for the new restructuring programme will be
in the mid-hundreds of millions of euros. Last week, sources
told Reuters it would cost 500 million euros.
Sources have also told Reuters that Osram will publish the
prospectus for its listing on Dec. 7, ahead of a vote at Siemens
annual general meeting on Jan. 23.
($1 = 0.7705 euro = 0.6236 pound)
(Editing by Victoria Bryan and Dan Lalor)