Annual General Meeting of OSRAM Licht AG

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1 1/11 Annual General Meeting of We want to tap the potentials of light to improve people's lives Dr. Olaf Berlien, Chairman of the Managing Board of International Congress Center Munich, February 20, 2018 Check against delivery

2 2/11 Ladies and gentlemen, esteemed shareholders, Good morning! On behalf of the Managing Board and the staff of OSRAM Licht AG, I would like to welcome you to the Osram Annual General Meeting. And I am delighted that there are many people following our Annual General Meeting online once again. Welcome to you, too. Ladies and gentlemen, a year ago I stood here and told you that Osram is on the threshold of a new era. We have now entered this new era with a clear standard for ourselves: "We want to tap the potentials of light to improve people's lives. This is our declared aim, our mission that drives us. Today, I want to talk about how we are delivering on this mission each and every day. Digitalization is enhancing our lives Improving the quality of people's lives has always been what motivates Osram. Almost a century ago we were making our towns and cities better places to live with the first electric light. And we were instrumental in increasing safety on the roads with the first high beam and dipped beam for cars. Today, the digital revolution is opening up a wealth of new possibilities for us that go far beyond the simple binary of 'light on, light off'. Today, cars use our sensors to detect what is around them and are already driving with a degree of autonomy. Invisible light from Osram can measure the distance to other objects, for example, or recognize when the driver is tired. We also offer powerful visible light. We are the first suppliers in the world to market a laser light that not only illuminates the road ahead but can also project warnings in front of the vehicle. We are making cars smarter and safer.

3 3/11 We are also breaking new ground in mobile phone technology: Non-visible light is used for iris or facial recognition, giving users quick, easy and far more secure access to their phones. At the same time we are using flash light applications to create the perfect lighting conditions for every camera shot. We can create the most brilliant colors and lighting moods. Take the facade of the national theater here in Munich, for example, or St. Peter's Square in Rome. We are already working with the Vatican on the next project: You can look forward to seeing St Peter's Basilica in a new light later this year. Testing has already been successfully completed. Works of art that were once shrouded in gloom can now be clearly seen. At an audience last year I had the honor of reporting on this project to Pope Francis a truly moving moment. These are only a few examples, but they illustrate how we are already making use of the many possibilities afforded by visible and non-visible light. And very successfully too, I might add. My speech today will be in three parts. I will start with a look back at the past fiscal year. Then I would like to explain to you how we are further focusing our three-pillars to high-tech for exploiting the opportunities opened up through digitalization. And I will end with a brief summary. Our Chief Financial Officer, Ingo Bank, will deliver a more detailed report on the past fiscal year. Strong fiscal year 2017 with significant growth But let's start with a look back was an absolute excellent year in which we were able to lay the foundations for further growth. We are now in the third year

4 4/11 of our transformation into a high-tech company and we are making great progress. LED products now account for almost 70 percent of our revenue. At the beginning of the decade, the proportion was still less than 20 percent. And of course the positive performance has had an effect on the morale of our team. An employee survey showed that loyalty to the company has increased significantly in recent years. More than 90 percent of our employees are prepared to go the extra mile for Osram. I am particularly proud of the fact that we performed better than other high-tech companies in all categories. In addition to high levels of motivation, staff also indicated a strong commitment to the company. This is not something we take for granted. And that's why, at this point, I would like to offer my heartfelt thanks to all our Osram employees. The extent of our success becomes particularly clear when we look at the figures for the last fiscal year: Growth accelerated further and we increased revenue by more than 8 percent. This has been primarily driven by the high-tech products in our LED segment and in Specialty Lighting. We achieved the highest operating profit in our long history, with a figure approaching 700 million. If we exclude the proceeds from a disposal in the prior fiscal year, earnings per share increased by nearly 11 percent. Overall, therefore, we have achieved our forecast for the 2017 fiscal year in full. The figures for the first quarter underline the strength of our performance: With a revenue increase in the region of 5 percent and an EBITDA margin of just under 17 percent, we have made a solid start to the new fiscal year.

5 5/11 And consistently good results are rewarded by the capital markets. Looking back at 2017, we can see a gratifying improvement in the share price, with an overall rise of more than 50 percent. By way of comparison, the MDAX climbed 18 percent and the DAX by just 12 percent. 'Diamond' innovation and growth initiative is bearing fruit The digital transformation we set in motion with our 'Diamond' innovation and growth initiative is also beginning to bear clear signs of fruit. Within the past two years we have doubled the value of the company! Our earnings margin also rose sharply over the same period, from 10 to 17 percent. We launched Diamond at the end of 2015 and continued its implementation last year consequently. We achieved an important Diamond milestone last March with the sale of Ledvance. The sale of the lamps business was probably the biggest change Osram has ever undergone. We are now focusing on the demanding high-tech markets with our three pillars. Last year, we also strengthened and expanded our technology portfolio with a number of investments and acquisitions. I will talk about some of the most important in the second part of my presentation. As part of the Diamond initiative, we have also invested massively in the expansion of our plant network. Our high-tech strategy has taken another leap forward with the opening of a new factory in Bulgaria where manufacturing of cutting-edge products for light management systems began last year. We are also expanding our worldwide production capacity in order to continue satisfying the persistently high level of demand for our LEDs. We are extending the Regensburg site by 50 percent. And we are doubling the size of the factory in

6 6/11 the Chinese city of Wuxi. In Kulim, in Malaysia, we opened the world's most advanced LED factory last November. Completed within just 18 months, the project was delivered below budget and far more quickly than planned. That is far from a given for projects on this scale. 1,500 new Osram employees are now manufacturing products for the whole world in a factory the size of ten soccer pitches. Taking responsibility for Germany as a business location At the same time, we have got the development of our German sites off the ground. We are planning to make the Berlin plant a global center of excellence for autonomous driving. The plant in Schwabmünchen, near Augsburg, used to make pre-materials for light bulbs but will be used to produce LED materials in the future. We will transform a plant in a relatively structurally weak region into a high-tech center with clean-room facilities. Blue-collar jobs and heavy machinery will be replaced by conditions not dissimilar to those in an operating room. And that in my opinion is a truly successful transformation. We are expanding factories that we would otherwise have been forced to close. Now they will be supporting our high-tech strategy instead. Talks with the employee representatives regarding the exact form this reorganization will take are going very well. We will shape the technological shift together. I would like to take this opportunity to thank the works council and the IG Metall union for their trustful and constructive cooperation. Responsibility and an approach that balances the interests of all stakeholders are guiding principles of our entrepreneurial behavior. We invest in jobs as well as in training and continuing professional development.

7 7/11 In the past year alone, headcount rose by 10 percent to over 26,000. A large number of these employees work in research and development. As you can imagine, as a high-tech company we face fierce competition for skilled workers so we have a clear focus on identifying and developing talent. We offer young people attractive opportunities, with traineeships in 15 different professions as well as degree apprenticeships. There are good reasons why Osram is now one of the most popular companies in Germany. Only last week we were rated as top employer. And also in other countries we received similar awards. In view of the skills shortage in Germany, we also have a tailored career development program. In Berlin, we are retraining staff to work on the laser production facilities there. At the site in Regensburg we are training our own skilled employees. We are delighted that our expansion in Regensburg is to be supported by the Federal Ministry for Economic Affairs and Energy, whose research and investment program for microelectronics aims to secure and strengthen growth and employment here in Germany, and in all relevant industries throughout Europe in which microelectronics are used. With the support of our well trained and highly motivated employees, we are driving the digital transformation forward. This is the basis for sustained and sustainable success both for us and for you. 'Anniversary dividend' allows shareholders to share in success We have marked the 111th year of our company's history with an 'anniversary dividend' of 111 cents per share. We are absolutely convinced of the long-term future success of the company.

8 8/11 Looking ahead to 2018, one thing is very clear: Osram will continue to grow. My colleague, Ingo Bank, will be presenting a more detailed outlook shortly. We can sum up the past fiscal year as well as 2018 in a few words: We are growing and we are investing. In the second part of my speech, I would like to explain to you exactly what this means for our business. Opto semiconductors open the door to new high-tech applications Osram is excellently positioned within its markets, and this is especially true for our LED division. This business is a pioneer of the digital revolution. We were manufacturing the first signal LEDs for electrical devices decades ago. Likewise the first infrared diodes for remote controls. More than ten years ago, our laser diodes enabled the first night view assist systems to be installed in cars. You could even say that this paved the way for the development of selfdriving cars. Our LED business is still a trailblazer in what is an extremely fastmoving competitive field: Just two years ago we celebrated a world first with an iris recognition system for unlocking smartphones. Our business has a unique technological basis from infrared to laser and this will enable us to continue coming up with new digital applications in the years ahead. A smartphone is already far more than a means of communication. Thanks to our sensors, you will soon be able to measure the calorie or sugar content of your food when shopping. Or test your fitness. Who knows what might be next? Shaping the automotive future At the same time, we are carefully planning the technology shift in our second and largest pillar, specialty lighting. Of around 100 million new vehicles that are

9 9/11 sold every year, 80 percent still use conventional lighting technology such as halogen. And as the global number one in this area, we still earn good money with this. But on the other hand, more than half of all new cars could be fitted with LED lighting technology by LED technology is also driving forward the process of digitalization in the automotive sector. This is opening up huge opportunities for us in the area of intelligent lighting solutions. To ensure we can make full use of these opportunities, we have joined forces with an ideal partner: Continental AG. We will be bringing our lighting module business to the planned joint venture, while Continental will bring lighting electronics and software. Around 1,500 employees will then develop, manufacture and market digital, intelligent lighting solutions for the automotive industry. We will manage and consolidate this new company: We are aiming for annual revenue in the mid-hundreds of millions euros from the start. Partnerships such as this and also takeovers are a good way of expanding our digital expertise in the automotive sector. That's why we took a stake last year in LeddarTech, a Canadian company that develops innovative guidance solutions for self-driving cars. At the start of the year we went to Las Vegas to showcase technologies such as these at the world's biggest consumer electronics fair. You can see some of them for yourselves today in the exhibition area in the foyer. Immerse yourself in the digital world of Osram. It's fun! I am constantly fascinated by the amazing things technology can do today.

10 10/11 Investment in smart cities and buildings The ambition for our third pillar the lighting solutions and systems business (LSS) is also to translate our technological edge into market leadership. However, the picture here is mixed: On the one hand we are not satisfied with the results of the luminaires business. I must make this very clear. Part of the problem is of our own making, while part is market related. We will be examining every means possible for improving the situation in the long term. At the same time, we will continue driving the business forward with a combination of capital expenditure and cost cutting. This involves concentrating luminaire manufacture in Germany. We will be repatriating luminaire production from a plant in the Slovak Republic to a facility in Traunreut here in Bavaria, simultaneously reducing complexity and saving money. On the other hand, we see huge potential in the second LSS business area with digital systems. We have set up a state-of-the-art plant for lighting electronics in Bulgaria and another in Mexico. This will enable us to press ahead with the digitalization of the business. Complementary is the creation of a completely new business area in the field of intelligent infrastructure in buildings. We have recently strengthened our position in this field with a variety of acquisitions and equity investments. I would single out in particular Digital Lumens, a successful young business based in Boston. Using its software platform, we will be able to operate the entire room control system from the lighting and temperature to the security system from a single control point. In March, we will be exhibiting an innovative concept for this at Light + Building, the world's biggest trade fair for the lighting sector. It has the potential to take

11 11/11 modern facilities management into a new dimension. I would of course be delighted to see you at the fair in Frankfurt. Focusing on the future Ladies and gentlemen, if I may sum up: The digitalization is opening up huge opportunities that are we exploiting to the full. We have excellent technology and a clear strategy to guide us. Whilst not ends in themselves, of course, the implementation of this strategy and sustained profitable growth are the fruits of our hard work and our desire to create a better quality of life. Without Osram, autonomous driving would be difficult to imagine. And without Osram, digital communication wouldn't exist in the form we know it today. The range of digital application fields we are opening up is immense. Our technologies are improving mobility, communication, security, and the well-being of every individual. With our clear mission, we will lead Osram successfully into the future. We are tapping the almost endless possibilities of light and we are enhancing people's lives. That is what each and every one of us is striving for with energy and passion. Thank you for the trust you have placed in us.

Franco German press release. following the interview between Ministers Le Maire and Altmaier, 18 December.

Franco German press release. following the interview between Ministers Le Maire and Altmaier, 18 December. Franco German press release following the interview between Ministers Le Maire and Altmaier, 18 December. Bruno Le Maire, Minister of Economy and Finance, met with Peter Altmaier, German Federal Minister