Presse Press. OSRAM: A strong brand in a dynamic market. Report by Wolfgang Dehen Chief Executive Officer of OSRAM Licht AG

Transcription

1 Presse Press Munich, 27. February 2014 OSRAM: A strong brand in a dynamic market Report by Wolfgang Dehen Chief Executive Officer of OSRAM Licht AG First Annual General Meeting of OSRAM Licht AG The spoken word shall prevail.

2 I am delighted to welcome you here today in Munich's Olympia Hall on behalf of the entire Managing Board of OSRAM Licht AG. My address today will focus on the following areas: My introduction will present a number of examples including one outstanding project here in Munich showing just what light is and what it can achieve. This will be followed by a brief overview of the changes that have taken place in the lighting industry and how they impact our business. Part three takes a look back at the past fiscal year Part four outlines how we intend to use the opportunities presented by the lighting market. In particular, I will focus on our brand, innovations, strategy and corporate culture. The fifth and final part concentrates on the outlook and our priorities in the current fiscal year. Market dynamics provides opportunities Many of you will presumably have displayed no more than a passing interest in the company OSRAM in the past. Before our stock exchange listing, attention focused above all on our products. Yet even in the past OSRAM was by no means insignificant, and this certainly holds true since the company gained independence. We are the largest listed pure play lighting company and the clear number two in the global lighting market. For us, that is both an incentive and a commitment! The lighting market encompasses far more than just lighting. OSRAM products and solutions cover the entire light spectrum from infrared light through visible light to ultraviolet light. What makes this expertise even more important is that today's trend in the lighting industry is quite clearly towards opto-semiconductor technology, also known in the trade as Solid State Lighting or SSL for short. SSL includes above all the light-emitting diodes known as LED chips. Simply put, these semiconductor crystals emit light when a current flows through them. However, SSL also includes infrared components, such as those used for rain sensors or for night vision systems in motor vehicles. What's more, SSL also includes laser diodes. And SSL also includes organic LEDs, for short OLED. OLED area light enable completely new applications in the future for example light windows, which glow in the dark but are transparent in daytime. OSRAM consequently stands for far more than just lighting. OSRAM is light in all its various facets. We are already making excellent use of the possibilities created by light in many areas. The collection of art in Munich's municipal art museum, the Lenbachhaus, is an outstanding example of our expertise in the field of lighting solutions. The lighting systems installed here must meet the highest standards. To implement this technologically, OSRAM developed a solution that remains unique: Different luminaire types with intelligent electronic control and high energy efficiency let the works of art appear in their natural colors regardless of the time of day and incident light, and without harmful UV rays. All in all a genuine world first! 2

3 In this respect, the Lenbachhaus project casts its shadow far beyond the world of museums and exhibitions. The project highlights the possible direction of future developments in semiconductor-based light using light emitting diodes and its positive impact on our everyday life. You will also be able to see at first hand that, in the era of light emitting diodes, light offers far more than simply the options switching "On Off" or dimming, as was the case until recently: In the LED era, light adds a dynamic element and stands for networking in intelligent systems. Dynamic lighting opens up completely new opportunities for planning engineers, operators and users to create impressive effects. It is immensely popular, especially in the context of sports facilities, as it enhances the experience they offer, boosting their appeal. Light in the era of LED also means incorporating intelligent lighting systems into the building management system and networking via the internet and mobile phones. Light in the era of LEDs also means outstanding energy efficiency: A good LED lamp requires up to 90 percent less electricity than a classical incandescent lamp. In other words, the right lighting makes it easy for everyone to make their own personal contribution to improving energy efficiency. And if we simultaneously consider that light accounts for roughly 15 percent of global electricity consumption, this clearly answers the question regarding the right track regarding of the energy turnaround. Reducing consumption is the simplest and most effective lever available. In the LED era, light also stands for health and well-being. The fastest-growing developments in the field of so-called "biologically effective light" are to be found in applications enhancing people's health or intellectual performance. Achievement tests have shown that learning results can be improved by up to 50 percent through the use of light that promotes concentration! We participate in major working groups devoted to this topic at both national and international levels and also support a university chair here in Munich. I think these examples suffice to give you some idea of what light can achieve today. Let me conclude my introductory remarks with the following statement: The trend in today's lighting industry clearly points towards opto-semiconductor technology. This technology opens up completely new potential applications for light manufacturers and their customers. This results in an incredibly dynamic market and the potential for growth in new areas. These and other factors require a leading light manufacturer to operate with a high degree of entrepreneurial freedom and consequently flexibility. That is why OSRAM was listed on the stock market. The OSRAM share was first listed on the stock exchange on July 8, That was a good and important day for your company! A company which with its strong brand, has stood for quality and innovation for more than 100 years. Light is another word for OSRAM or as we see it today: Light is OSRAM! 3

4 Our brand promise gives customers security even in times of fundamental change. The OSRAM brand is the constant in a world characterized by permanent changing and adapting companies. It stands for the trust that customers and employees place in their company. We are the world s largest listed pure play lighting company, and hold a leading position in several important market segments. We are the number two in general illumination, have for many years steadfastly remained the number two for opto-semiconductor components, including LED chips, and are the number one in projection and entertainment and also the number one in automotive lighting. Although firmly rooted in Germany, we generate revenues of well over five billion euros with our current global workforce of 35,000 employees in over 120 countries around the world. All in all, a sound base on which your company can build its future. Strengthen and maintain leading position in LED technology Let me start with a few short and simple technical definitions. First of all, we have the lamp and the luminaire: In a nutshell, the lamp is the light source while the luminaire is the fixture accommodating the lamp and other functions. OSRAM's range includes considerably more complex products in addition to lamps and luminaires such as professional light management systems. These systems automate the lighting in a room, building or outdoor application. Our portfolio also includes lighting solutions, i.e. complex projects in which lamps, luminaires, controllers and light management are brought into line with the customer's specific needs and implemented. The solution presented earlier for the Lenbachhaus municipal art museum is one such project. This short explanation of the terms lamp, luminaire, light management system and lighting solution will suffice. The order I have listed them in is deliberate, as the increasing complexity from components to systems reflects the value chain along which we have organized our activities in seven business units. In our financial reporting, such as the Annual Report, we have combined these seven units into four reporting segments: The largest reporting segment Lamps and Components encompasses the business with lamps, control systems and components for LED and light management systems. The segment Luminaires and Solutions covers the project and solutions business. This segment includes luminaires for professional applications and for consumers, as well as lighting solutions and light management systems. The associated installation and maintenance work is covered by the service business. The Specialty Lighting segment literally covers specialties, such as lighting for the automotive sector, as well as for the fields of entertainment and projection. The automotive business accounts for the largest share of this segment. The reporting segment Opto Semiconductors covers the business with opto-electronic semiconductors. Its products include LED components for visible light which are increasingly 4

5 also being used for general lighting purposes. Further products include infrared components and laser diodes. Let me now turn to the changes taking place in the lighting industry. This process is being driven by technology as light emitting diodes become increasingly widespread. The advent of LED technology in general lighting has resulted in the biggest transformation of our industry since the invention of the incandescent lamp. As I briefly mentioned in my introduction, the advantages of LEDs over other light sources are quite literally glaring. The technology is already established in some applications, such as backlighting for television and computer screens, while it is only beginning to take general light by storm. This development is primarily attributable to the decline in prices. Due above all to intensive competition, the price of LED products has steadily declined in recent years. Thanks to the energy saved, buying LED lamps is now paying off more and more quickly, even for consumers. This will also increase customer acceptance in the future, too. At the same time more and more people throughout the world now have access to electricity and hence to electric light. In 2013 alone, the number of lighting points or light sources in private homes worldwide increased by more than 300 million units. Above all, this immense number of new lighting points poses a challenge in terms of the energy efficiency mentioned earlier. It is another important lever in the process of change: For instance, if every private household in Germany were to replace just one 60 Watt incandescent lamp with a corresponding LED lamp, Germany's largest brown coal power station could shut down for roughly one month per year. The spread of LED lamps is also being accelerated by various changes in the law. The European Union, for instance, has for some time sought, through its EcoDesign Directive to ensure that products which are not energy-efficient are gradually withdrawn from the market. These include incandescent lamps as an inefficient light source. What we are seeing is a global trend: Sales of conventional incandescent lamps with wattages of 40 and 60 Watt will likewise be discontinued in the United States in the course of this year. And in China, too, a corresponding ruling will come into force in October for 60 Watt incandescent lamps. In the light of these circumstances technological change, growing world population and increasing electrification, energy efficiency and statutory changes market models indicate that semiconductor-based technologies as a whole will account for two-thirds of the entire lighting market in 2020, as compared to just 20 percent in Such prognoses highlight the hitherto unrivalled speed at which the world of light is changing. For the sake of clarity: For more than 100 years, the incandescent lamp was symbolic of this market. The transition from incandescent lamps to energy saving lamps took more than 70 years. Another quarter of a century passed before the first LED lamps worthy of the 5

6 name appeared on the market. Now, in the digital era of light, innovation and product cycles last no more than six to twelve months. Innovations have literally a very short lifespan in this scenario. For over 100 years, OSRAM has set milestones in the history of the lighting market and contributed to its development. Towards the end of the 1920s, OSRAM presented the first Bilux lamp for the automotive sector. Bilux is the name given to lamps with two filaments: one for the high beam, the other for the low beam. Many halogen headlamps still operate according to this principle today. In the 1930s, OSRAM introduced the first marketable fluorescent lamp suitable for operation at mains voltage. And in the 1990s, we were the first to introduce xenon light for the automotive sector. The construction of a manufacturing facility for LED chips started in Regensburg as far back as in Today, we are the only manufacturer with a notable chip-producing facility in Europe. What's more in 2011 OSRAM was one of the first manufacturers ever to change its chip production over to 6-inch wafers. And while everyone is still talking about the opportunities offered by the Chinese market, our products have been represented on that market for the past 80 years or so. These are just a few examples, but they show that we have recognized trends at an early stage and taken all the required strategic steps. Even today, we are adjusting to this dynamic process in markets and innovations, and meet all the requirements for maintaining our strong position, but also for expanding on it. OSRAM is a globally operating brand company firmly rooted in regional markets. We hold a strong position in attractive growth markets, such as automotive lighting or optosemiconductor components. Proximity to the customer is assured through all channels and a diversified customer base. We have grown from a company exclusively manufacturing lamps and components to one that is present in the lighting market throughout the entire value chain. Moreover, we have OSRAM Push, an improvement program launched in 2012 with the aim of sustainably improving the company's performance. I cannot deny that the potential of light as a growth market also attracts new competitors. This makes it even more important to be the first to arrive on the market. Market studies indicate that by 2020 the lighting market will grow by four percent on average per year, to over 110 billion euros. Just for comparison: The global market for television sets is currently worth more than 70 billion euros. Our position in this market is excellent. OSRAM currently generates one third of its revenue with semiconductor-based products. This makes us a top performer. And that should remain the case! For the current fiscal year, the Managing Board has resolved, among other things, to further expand the LED penetration of our portfolio. Its share of revenues should stand at over 50 percent by We are a formidable match for the new competition: Our division for opto-semiconductor components has been the number two worldwide for many years ahead of companies from Korea, China, Taiwan, Europe and the United States! For the past 40 years our opto- 6

7 semiconductor business with locations in Germany and Malaysia, as well as a future location in China, has delivered numerous pioneering developments in the fields of lighting, visualization and sensors. Which proves that: the future builds past success! It also shows that much of what we have done was correct. Rest assured: We have taken all the steps needed to ensure that we can maintain and strengthen our leading position in LED technology now and in the future. However, one thing must not be overlooked: While semiconductor-based products SSL currently account for one-third of our sales, this also means that two-thirds are being generated with traditional products. Our traditional business remains important in spite of the growing acceptance of SSL. This business generates the funds needed to invest in tomorrow's technology SSL. Automotive lighting is one example illustrating the strength of our traditional business. In this sector, the mixture of OEM business and replacement parts still provides scope for traditional products. Xenon and halogen in particular will continue to play an important role here in the coming years, but with slowing momentum. In general illumination, too, there are also areas which have not yet changed over directly to LED technology. Industrial and office lighting, for example, where fluorescent lamps will remain in demand for a long time to come on account of their energy efficiency and cost efficiency. However, it is important is, that we as a company prepare now for the time when LED lamps dominate the market. Among other things, this means reviewing the vertical range of manufacturing. The transition into the digital era inevitably linked to the adjustment of our capacities. Let me explain the background in a few words: Traditional business is not only declining, but also has a relatively high percentage of components manufactured in-house, as compared to SSL. In other words: Almost all the components making up a traditional lamp came from a single source, from the engineering of the production machine to manufacture of the filament. In-house production naturally is and will remain an important pillar for OSRAM but not the only one. Particularly in the case of lamps, but also in other areas, it will no longer be possible to provide a full range based solely on in-house production in future. Increasing complexity and speed along the value chain makes it necessary for us to focus ourselves and weigh up exactly where we want to have our own production. In the light of these facts, we aim to reduce the number of plants by eleven by the end of This extensive transformation of the company was a distinct characteristic, particularly of the fiscal year just ended. 7

8 OSRAM 2013 lays the foundation for the future 2013 was a busy year, but the effort has paid off, for it was a successful year for OSRAM. We have achieved a great deal and are proud of our success which lets look forward to 2014 with optimism. More than 100 years after being founded, the company was listed on the stock exchange last July. I think we can say, without exaggeration, that our listing was successful! In the first few weeks alone, we were able to enhance our stock market value by around seven billion euros for the shareholders of OSRAM and Siemens. OSRAM alone now accounts for a market capitalization of around five billion euros. The trust displayed by our shareholders, the satisfaction of our customers and the commitment and motivation of our employees are our most valuable assets. We will nurture and strengthen them. To this end, we are striving towards a sustainable corporate development in keeping with the principle of continuous improvement. After all, we intend to remain one of the leading companies in our industry in the coming years, too with Number One positions in relevant and technologically sophisticated segments. Fiscal year 2013 was also a successful year for OSRAM in economic terms. OSRAM has not only fully achieved but in some cases even outstripped its targets. I would like to take this opportunity to express my sincere thanks and deep appreciation to all our employees. Our team remained highly motivated and totally concentrated, even during the difficult reorganization period. Their performance was truly outstanding! My thanks are also due to our Supervisory Board chaired by Peter Bauer and Professor Siegfried Russwurm, who retired from the Board at the end of November of last year. You could say that we faced three major tasks last year: the listing, the ongoing process of transforming the company and the challenge of ensuring a successful business year in a difficult environment. With an enormous effort, we managed this three-fold challenge very well in my opinion. Revenue rose two percent on a comparable basis, and EBITA even increased by 31 percent excluding special items. The signal is clear: Our company is once again on the road to profitable growth. We are confident that we will be able to maintain this course in Among other things, this means that attention must continue to focus on cost and price discipline. OSRAM Push is an important factor in this gratifying development. Our over-all, comprehensive, sustainable performance improvement program was launched in I have deliberately stressed the words "continuous" and "improvement" because OSRAM Push is more than simply a program for achieving cumulative gross savings of 1.2 billion euros by That alone will not suffice to survive in a dynamically evolving market. However, at this juncture, I must also clearly state that where there is light, there must be shadow. This admission is in line with our policy of open and honest communication with 8

9 our stakeholders: The cutbacks were not only harsh, but also essential if OSRAM is to operate successfully in the long term in a rapidly changing lighting market. All in all, OSRAM will cut back around 8,700 jobs worldwide in conjunction with the reorganization of its production facilities. The reduction already totaled 6,600 by the end of fiscal year 2013 and reached around 7,200 by the end of the first quarter in fiscal year May I take this opportunity to thank our employee representatives for supporting the company's necessary reorganization in close consultation with the corporate management and at the same time providing key impetus. However, these measures only account for roughly one fifth of the planned savings. By far the greater part will be achieved through a multitude of other measures first and foremost through optimized purchasing. Nor should we forget that the aim of this restructuring project is to safeguard the future of OSRAM. Our Opto Semiconductors segment OS alone has created no fewer than 1,400 jobs worldwide in fields with excellent prospects since This is due to the continuing high momentum of LED business which also was characteristic of the fiscal year just ended. In the last two quarters of fiscal year 2013, semiconductor-based products and solutions consequently accounted for 31 percent of OSRAM's revenues. This share totaled 29 percent for the year as a whole, four percentage points above the level in A solid foundation was laid in fiscal year Contrary to our original expectations, we were even able to conclude the year with a small net profit and have also absorbed most of the costs planned for the transformation. Our successful stock exchange listing makes us more flexible and therefore also more effective when it comes to tapping the future opportunities of the lighting market. OSRAM therefore has every reason to look to the future optimistically. However, we cannot stop there, for both we and the industry as a whole still have a long way to go before this transformation process has been concluded. But we can build on our strengths: our brand, our innovations, our strategy and our corporate culture: The form our identity, so to say. OSRAM as an integrated lighting expert benefits from market opportunities I will now review how OSRAM defines its identity and how this impacts our activities as well as our achievements in relation to our customers and you, our stakeholders. In times of fundamental change, such as that which our company is momentarily going through, it is particularly important to be able to look back on a brand with long history full of key experiences and major successes. As I said earlier the future builds on past success! At the same time, we also know that nothing can be more dangerous than resting on one s laurels. As already said, that makes it both an incentive and a commitment for us! 9

10 An incentive and a commitment to deliver on our brand promises of innovation and quality. We see both innovation and quality as constants in our new products and solutions products and solutions that are already reaching far beyond the boundaries of conventional lighting. They set new standards and are paving the way for completely new applications. Let me give you a few examples: The so-called "Phaser" technology introduced by OSRAM in the field of projection is a combination of laser and phosphor material. This technology enables maximum image quality for a pure laser-based projection. Decades of experience with laser diodes proved to be a major advantage here. You may have heard of this already. Some of you may have heard that we came a significant step closer to the road compatibility of OLED rear lights last year. What very few people probably know is that OSRAM was involved in developing the latest generation of laser-based headlamps in the pioneering BMW i8. The BMW i8 will be the first series-built vehicle with laser light to be launched on the market worldwide! OSRAM played a decisive part in developing this innovative laser light source. The infrared LEDs from OSRAM in touchscreens have a completely different function. Instead of requiring direct finger contact as in the past, optical infrared solutions will allow them to be controlled without direct contact in the future. Such solutions are already being used in larger displays. However, LEDs are now also small enough to allow them to be used in smartphones. These are just a few examples taken from a long, long list. One thing is clear: The possibilities are almost endless! I like our old company motto: "As bright as day". It too is both an incentive and a commitment to lead the company from a bright past to a briliant future. At the same time, it is also clear that the ascendency of LED technology has revolutionized the lighting domain. Our new motto "Light is OSRAM" is therefore more comprehensive and more far-reaching. It expresses a claim requiring an equally radical internal departure. This claim finds its visible expression in the architecture of the new headquarters replacing the former complex which had outlived its life cycle in many respects. With a modern, future-oriented workplace we can now offer our employees a professional environment in which to prepare OSRAM for the digital future of light. The new headquarters building represents our sustainable corporate orientation and also provides an attractive work environment new talent, for young professionals have completely different expectations of their work environment in today's competition for the best candidates. 10

11 Attractive but not excessive, locally rooted and naturally energy-efficient! The latter in particular is a claim that has also been met by our products for almost a century. An internal departure was also urgently needed in our corporate culture. A corresponding program OSRAM Push was therefore set up. It embraces the entire company, encompassing all fields of business. It is continuous, as essential elements of OSRAM Push go beyond 2014 and it is comprehensive, as it addresses all units and levels in the company. The program focuses on the following aspects: Firstly our corporate culture: We want to encourage our employees to think and act in entrepreneurial ways and to strengthen our performance culture. Secondly the optimization of our operative business: Ultimately, all departments in the company will become leaner, faster, more flexible and more customer-centric to increase competitiveness, the profitability of our product portfolio and customer satisfaction and loyalty. Third the continuous optimization of structures and processes in the rapidly changing SSL business and therewith a permanent cost optimization in all areas. And fourthly profitable growth: To this end, we must make use of the advantages of an integrated lighting company, creating new business models and opening up new markets with innovative products, technologies and solutions. A great deal has already been achieved. Let me explain this with the aid of the first example, corporate culture. In my opinion, it is the essential prerequisite for successful implementation of the program's other focal points: We have adopted proprietorial care and personal responsibility as management principles. Each individual is responsible for his or her specific tasks and contributes to the company's sustainable economic output. And each individual should also share in its success. To this end, we have launched a share scheme for the employees which will successively be expanded, thus gradually establishing a shareholding culture in the company. The effective interaction of these points is evident above all in the level of customer satisfaction at OSRAM which we have been able to improve in recent years despite the company's massive restructuring. I said earlier that "Light is OSRAM" goes far beyond the light of day. But what exactly does that mean? I have already mentioned two major aspects of our strategy: The first concerns the strengthening of our entrepreneurial corporate culture, the other the leveraging of our core competences to reinforce and expand on our position. 11

12 I would now like to introduce a third aspect: An intelligent and selective forward integration. A few years ago, OSRAM exclusively manufactured lamps and components: classic incandescent lamps for home use, fluorescent lamps for work environments and xenon lamps for car headlights. Over the years, lamps have generally become more durable, a process that is now climaxing with the advent of LEDs in general lighting, the largest single market segment. A lamp life of ten, 20 or more years is increasingly becoming the norm. This naturally raises doubts as to the classic business model with replacement parts. In other words, the long lifetime of LED lamps in combination with the growing pressure on prices due to new competitors calls for a radical rethink. Instead of having a constant source of revenue from the replacement parts business, one now thinks of enlarging their product range. In specialty and general lighting, this is known as forward integration namely to advance from components and simple lamps, into forward integrated products, i.e. modules or luminaires, in the light management systems business or integrated solutions and value-added services. We occupy relevant positions at all stages of the value chain, creating value-added for our customers in collaboration with our business units. This applies particularly in the professional segment which accounts for around 80 percent of our sales. At the same time, we are constantly exploring the possibilities offered by in-house production and external purchasing. As a result, LEDs from our in-house production are also used in our general lighting segments. This allows us to respond flexibly to market developments. I also want to give you an example for the use of the previously mentioned core competencies: In the Opto Semiconductors segment, this means broadening the product range across the entire spectrum of light from visible to invisible light. Therewith, for many of our business units this segment is the start and beginning of a selective forward integration. We are convinced that, as integrated lighting expert, OSRAM will be better able to profit from opportunities presented by the market than a manufacturer who has specialized in only one or two stages of the value chain. We combine the potentials of individual value-adding stages to create additional value, for we can create a need, satisfy the resultant demand and offer the services required to retain customer loyalty in the long term. Companies which control all the essential stages of the value chain, but not necessarily produce everything themselves, consequently enjoy a distinct advantage. This summarizes what we at OSRAM mean when we say talk of gearing our business to the entire value chain of lighting. The two acquisitions undertaken a few years ago in conjunction with luminaires and the lighting solutions business may not yet have paid off completely, but we are certain that the basic decision to turn our attention to these lines of business was imperative. Especially if 12

13 we intend to remain a manufacturer with decisive influence in the large lighting market now and in the future, in turn fulfilling our aspiration. In strategic terms, this decision was absolutely right. We are making good progress and are confident that OSRAM can again decisive business value from this in the future. OSRAM confirms outlook In the fifth and final part of my speech, I would like to conclude with a brief outlook: First to the fiscal year which started on October 1, 2013 and second with regard to the priorities and main activities which we have set ourselves for In a still challenging environment, we have started well into the new fiscal year and recorded a good first quarter. Specifically, this means that... The Managing Board of OSRAM still expects revenue growth on a comparable basis by which we mean excluding portfolio and currency effects to exceed global real GDP growth. Regarding EBITA adjusted for special items, OSRAM expects a margin of more than eight percent in fiscal We will profit above all from the implementation of OSRAM Push, as well as from the revenue growth to be expected in the segments opto-electronic semiconductors and specialty lighting. Due to greater profitability and the decline in transformation costs as compared to fiscal year 2013, the Managing Board expects a sharp rise in net income in the current fiscal year. This should naturally be viewed in the light of a comparatively low prior-year figure. As a result, we expect to generate a return on capital employed above the cost of capital of 8.5 percent. Free cash flow should reach a triple-digit million euro figure in 2014, but remain below the high prior-year figure. The reduction is mainly due to higher cash outflows for the transformation and capital expenditure. The conditions for meeting our targets this year are good. The fundamental changes taking place in the lighting market continue to present challenges. At the same time, however, they are also opportunities which will resolutely be seized. OSRAM Push will consistently be implemented to meet these challenges and opportunities. We therefore also confirm the plans already published in this context. All in all, we expect 2014 to bring profitable growth on a comparable basis and a further improvement in long-term competitiveness. 13

14 This brings me to the second part of my look ahead our priorities and main activities in fiscal year As has already been repeated more than once, the lighting industry is increasingly being shaped by the process of technological shift towards SSL. As a result we will focus on stepping up our strategic orientation efforts towards SSL in all fields of business. In the current fiscal year, we will extend the focus of our OSRAM Push program to organic growth besides cost optimization. We will do everything possible to assure the long-term success of our past acquisitions. We are firmly targeting a reported EBITA margin of eight percent on average over the full cycle starting in fiscal year And we will now also seize the opportunity to identify further growth potential in regions, products, technologies and the value added chain. These are ambitious targets, but they are also a powerful motivator. We are the largest listed pure play lighting company and the clear number two in the global lighting market. What's more, we are determined to strengthen and expand on this position in the coming years. Patience will be needed. But so will courage in order to make the necessary changes! Above all, we want to be a strong and credible partner, for our employees, our customers and our stakeholders. 14