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Osram: 'we are morphing into a high tech company'.

(CercleFinance.com) - Osram Licht shares have risen by over 42% so far this year.
Investors seem to be cheering the German lighting group's new strategy, and particularly the strong growth at its opto-semiconductors unit, which is gaining market share in both auto and mobile segments. The positive momentum has progressed to such an extent that some analysts now see a credible path to 100 euros, while the shares are currently trading at 71 euros. Chief financial officer Ingo Bank highlights the key factors behind the company's success.

Cercle Finance: How did you experience Siemens' recent sale of 18.15 million Osram shares for 1.2 billion euros. Is it the end of an era for the group?

Ingo Bank: This has marked the final step of our spin-off from Siemens and our listing in July 2013. We see this placement as a sign of confidence. We have to thank Siemens for its role as a core shareholder over the past few years and we will continue with our transformation into a high tech company. It is now time to welcome our new shareholders and appreciate them for their support of our strategy.

CF: Osram's opto-semiconductors unit is often considered as the jewel in Osram's crown. How do you explain such a success?

IB: We are a market leader in automotive LED and infrared applications. Our IP portfolio and technology capabilities, combined with a deep understanding of our costumers' application needs, help us to grow our revenue base, currently at double-digit rates. With our new factory in Kulim, Malaysia, we also intend to participate in the growing market for general lighting.

CF: For the new fiscal year 2018, Osram targets EBITDA, adjusted for extraordinary items, of around 700 million euros. Some analysts deem to be "conservative," given the group's current momentum. Is the target too cautious?

IB: Our outlook for the current fiscal year is indeed affected by the weakening dollar and ramp-up costs for capacity expansions. In all, this should burden our adjusted EBITDA by close to 150 million euros relative to FY 2017. If we adjust for these effects, you can see that we are still planning to achieve significant business and productivity improvements.

CF: Can you tell us a little more about your planned joint venture with Continental. What are the main growth areas in the sector?

IB: The automotive industry lighting market is in the midst of technological change, with a strong move away from conventional lighting towards semiconductor-based lighting solutions. Increasingly we will see more and more intelligent light functions in the market, enabled through the combination of semiconductor-based technology, software and electronics. This digitalization is opening up a whole new world of applications and with it significant growth opportunities. By joining forces with Continental, we will be in a unique position to deliver innovations that integrate lighting, sensor technology and electronics seamlessly into a single application.

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