Changing Lighting Market Urges Osram Licht to Direct Focus To Service and Maintenance Business

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As the lighting industry transits from traditional light sources to LEDs, Osram Licht, the world’s second largest lighting company, has responded by shifting its focus on service and maintenance business to maintain steady revenue growth, according to a recent Bloomberg report.

Services such as maintaining city streetlight networks or managing complex sports stadium lighting systems have generated “double-digit million” dollar figure in sales, said Osram’s Chief Financial Officer Klaus Patzak.

“It’s mostly in the U.S., but this is a multi-billion dollar industry,” said Patzak. “From this you can grow over many years at a double-digit percentage rate.” Osram’s total sales fell 2.8 percent to EUR 5.1 billion (US $5.5 billion) in the 12 months through September.

LEDs are hurting traditional light bulb business, but it has also created new applications and products for luxury cars, artificial sunlight and health care.

The company is also looking into the automotive lighting industry to further stimulate growth. Car lighting demands has helped Osram compensate decline in traditional bulb sales, and boost profits last year, said Patzak. About 60% of Osram Opto Semiconductors EUR 1.1 billion revenue came from automotive industry demands, he said.

Car lighting consists about 30% of the company’s total revenue, which has helped stabilize sales of traditional lamps since many entry-level cars still use halogen lamp, added Patzak.

The German lighting manufacturer is mainly competing against Philips for long-term maintenance and service contracts. Washington’s transit authority awarded a contract to Philips in 2013 to upgrade 13,000 lighting fixtures in parking lots, along with a 10-year maintenance deal.

The two companies are also competing head-on in providing lighting solutions for historic sites.

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