OSRAM Licht AG

Small/Mid-Cap: Capital Goods & Industrial Engineering

Lamps growing brighter

Following OSRAMs FY 2013 results we have undertaken a

detailed review of our model. We leave our estimates of revenues and profits for 2014 largely unchanged, but have increased our 2015 adjusted EBITA forecast by 11% and EPS by 8%, driven by increases to profit expectations at Lamps and Opto, partly offset by higher Corporate expenses. We increase our year-end 2014 price target by 13% to 46.7, driven by higher 2015 earnings and improving earnings quality. Our price target is based on a blended average of P/E, EV/EBIT and DCF valuations. We have marginally lifted our target P/E ratio to 13.0x, which is now a small discount to the sector and reflects the groups stronger-than-expected balance sheet. OSRAM remains a Buy, with earnings recovery supported by four factors: 1) restructuring is delivering results, demonstrated by managements 20% increase to 2015 savings targets, which now stand at 1.2bn; 2) the most valuable core of OSRAM (Speciality Lighting and OSRAM Opto) is achieving structural growth and rising EBITA margins; 3) OSRAMs main end markets within construction and auto are set to enjoy further cyclical growth during 2014; and 4) strong Q4 2013 cash generation provides a strong balance sheet and financial flexibility. Growth and margin turnaround anticipated: At Lamps & Components, we expect a 60% increase in adjusted EBITA from 2013 to 2015, driven by a payback from restructuring, combined with a return to growth of traditional lamps. Moreover, we see slow growth and stable margins from the valuable core of OSRAM (Speciality Lighting and Opto), while Luminaires should demonstrate a return to profits as exits from loss-making activities are achieved. Balance-sheet strength supports repositioning: With 172m net cash at year-end, OSRAM remains well placed to execute on restructuring, support the transition to LED-based lighting and make strategic acquisitions. Free cash generation in 2014 should support a resumption of dividend payments this year. Shares remain attractively valued: Looking to 2015, OSRAM should generate over 10% operating margins. With the shares trading below 0.7x EV/sales, 6.4x EV/EBITA (adjusted) and 11x P/E, we see over 20% upside looking to 2015.
2011 5,031 695 442 243 941 32.1% 13.8% 8.8% 22.4% 2012 5,400 659 238 -392 270 25.9% 12.2% 4.4% 11.7% 2013 5,289 723 382 28 -169 0.32 2.44 0.00 28.2% 13.7% 7.2% 0.0% 15.8% 0.6 4.2 7.9 12.5 2014E 5,400 785 434 208 -325 2.00 2.85 0.79 31.3% 14.5% 8.0% 1.9% 16.4% 0.7 5.0 9.1 14.4 2015E 5,539 914 554 343 -573 3.28 3.77 1.31 32.2% 16.5% 10.0% 3.2% 19.3% 0.7 4.1 6.7 10.9

Buy
Current price Price target

EUR 41.11

EUR 46.70

14/11/2013 XETRA Close Market cap EUR 4,293 m Reuters OSRn.DE Bloomberg OSR GY Changes made in this note Rating Buy (no change) Price target EUR 46.70 (41.50) Chg
2013 2014E 2015E old % old % old % 5,314 -0.5 5,446 -0.8 5,629 -1.6 Sales 369 3.6 426 1.9 500 10.8 EBIT 2.38 2.3 2.85 0.1 3.48 8.3 EPS Source: Berenberg estimates

Share data

Shares outstanding (m) Enterprise value (EUR m) Daily trading volume

105 3,957 930,000 41 24 MDAX 12.9 % 24.8 % 1.5 -8.4% 2.3% 252.4%

Performance data
High 52 weeks (EUR) Low 52 weeks (EUR) Relative performance to SXXP 1 month 15.6 % 3 months 26.4 % 12 months -

Key data
Price/book value Net gearing CAGR sales 2012-2015 CAGR EPS 2012-2015

Business activities:
OSRAM is the world's largest lighting pure play, present throughout the entire lighting value chain. They produce LEDs, lamps, components, luminaires and lighting solutions as well as automotive lighting.

Y/E 30.09., EUR m Sales EBITDA EBIT Net profit Y/E net debt (net cash) EPS (reported) EPS (recurring) DPS Gross margin EBITDA margin EBIT margin Dividend yield ROCE EV/sales EV/EBITDA EV/EBIT P/E Source: Company data, Berenberg

Non-institutional shareholders:
Siemens 17% Siemens pension fund 2.5%

15 November 2013
William Mackie
Analyst +44 20 3207 7837
william.mackie@berenberg.com

Margaret Paxton
Analyst +44 20 3207 7934
margaret.paxton@berenberg.com

Chris Armstrong
Specialist Sales +44 20 3207 7809
chris.armstrong@berenberg.com

OSRAM Licht AG
Small/Mid-Cap: Capital Goods & Industrial Engineering

A strong core and self-help delivering

The companys Q4 2013 and FY 2013 results have confirmed the investment case for OSRAM. The core divisions of Speciality Lighting and OSRAM Opto performed well. Moreover, progress with the PUSH restructuring programme enabled management to announce a 20% increase in targeted productivity savings to 1.2bn by 2015, underpinned by a c10% increase in headcount reduction. Moreover, strong cash generation resulted in a better-than-expected year-end net cash balance of over 170m, securing the groups future.

The core of OSRAM performed well in H2 2013

OSRAMs Speciality Lighting division achieved 8% growth in Q4, with the company expecting positive momentum to continue into 2014, supported by automotive demand and LED adoption. Operating margins stayed comfortably above 15% and OSRAM expects them to approach 17% in Q1 2014. OSRAM Opto also achieved a strong finish to 2013, reporting 18% and 13% organic revenue growth in Q3 and Q4 2013 respectively, which it should sustain into the start of 2014. The volume growth reflected OSRAMs ability to raise internal demand, especially within the Speciality Lighting segment. The higher volume and improved capacity utilisation enabled operating margins to increase to 14% in H2 2013, almost 400bp above H1 and refuting concerns that profits in the division would suffer from competitive pressures across the industry.

PUSH restructuring and mix stability to lift Lamps and Luminaires

The Lamps & Components division reported another year of losses in 2013, due to c180m of restructuring expenses. However, payback from restructuring meant underlying margins increased 300bp to 4.9%, and positive momentum is expected to continue into 2014 now that most agreements with unions have been concluded. Heavy restructuring provisions at the Luminaires & Solutions division also prepares the ground for a return to profitability in H2 2014. More importantly, we believe the Lamps businesses will achieve c5% growth across the division in 2014, supported by 30-40% growth of LED-based lamps and rising demand for thermal and halogen lamps. Rising volumes and prudent cost-cutting should drive a strong margin increase and help assuage investor concerns about the sustainable profitability of the division.

Adjusting forecasts upward, ahead of consensus; valuation attractive

Following the 2013 results we have adjusted our 2014 and 2015 forecasts to reflect changes in management commentary. Our revenue forecasts remain largely unchanged, although we have made significant changes to the mix of profits, linked to higher corporate expenses offset by higher profits within the Lamps division. In summary, we leave our adjusted EPS estimate for 2014 unchanged, while lifting it for 2015 by 8%. We lift our 2014 year-end price target by 13% to 46.7 per share, reflecting the higher earnings estimates and improving earnings quality for the group. We see 14% upside on a 12-month basis and 22% to year-end 2015. We retain our Buy rating.

OSRAM Licht AG
Small/Mid-Cap: Capital Goods & Industrial Engineering

Valuation still over 10% upside to end-2014

Following the FY 2013 results and managements positive 2014 guidance, we revise our December 2014 price target upwards by 13% to 46.7. We now expect that by year-end 2015 OSRAM will be worth c50 per share. Our valuation framework is based on 2015 valuations and assumptions discounted back to year-end 2014, using a discount rate of 10%. Figure 1: Valuation summary ()
Valuation m ethod SOTP DCF EV/EBIT P/E Average share price 2014 48.1 47.4 46.2 45.3 46.7 2015 52.1 51.3 50.0 49.0 50.6 Assum ptions Peer trading multiples 9% WACC, 2% terminal grow th, Adj EBITA 8% Through cycle average 9.0x Through cycle average 13.0x Blended average

Source: Berenberg estimates

In a slight departure from our previous valuation we have applied a 13.0x P/E to 2015 earnings, which reflects the strength of the balance sheet (577m net cash forecast excluding M&A) and is more in line with the sector valuations. Our assumptions for target EV/EBIT, DCF and SOTP remain unchanged.

Sum-of-the-parts valuation reflects the split of value

Reviewing the groups divisions, it becomes clear where the value of OSRAM resides; namely within the Speciality Lighting and Opto Semiconductor divisions. Our valuation for Speciality Lighting remains in line with the valuations of other high-quality auto suppliers. Our Opto Semiconductor valuation is at a discount to other LED peers, such as Cree. Scope for further valuation upside is likely to come from a re-rating of the valuation applied to the Lamps & Components and the Luminaires divisions, as returns in these sectors are increased. Figure 2: OSRAM SOP valuation ()
SotP 2015E Sales EBIT 1,518 242 1,115 147 2,687 199 589 33 (371) (52) 5,539 581 Sales 2.0 2.0 0.6 0.5 1.4 1.1 High EBIT 10.0 15.0 8.0 n.m. 10.0 10.3 Speciality Lighting Opto Semiconductor Lamps & components Luminaires and Solutions Corp/rec Osram Investments Net debt Net pensions Minorities Deferred tax asset (B/S) Net Adjustments 2015 Market cap Im plied 2013 Market cap NOSH Sep 2015 Share price discount rate to Dec 2014 @ 10% discount 2014 Share price Sales 1.7 1.6 0.5 0.4 1.4 0.9 EV Multiples Mid EBIT 9.0 12.0 7.0 n.m. 10.0 8.7 Sales 1.5 1.3 0.4 0.3 1.4 0.8 Low EBIT 8.0 10.0 6.0 n.m. 10.0 7.3 High EV 2,416 2,206 1,596 295 (520) 5,992 58 (169) 359 21 397 400 6,392 5,904 104.7 61.1 92% 56.4 Mid EV 2,174 1,764 1,396 236 (520) 5,051 58 (169) 359 21 397 400 5,451 5,035 104.7 52.1 92% 48.1 Low EV 1,933 1,470 1,197 177 (520) 4,257 58 (169) 359 21 397 400 4,657 4,301 104.7 44.5 92% 41.1

Source: Berenberg estimates

OSRAM Licht AG
Small/Mid-Cap: Capital Goods & Industrial Engineering

Divisional divergence
Within this section we review the performance of each of OSRAMs operating divisions, discuss commentary and thoughts linked to the outlook and analyse key issues for the year ahead. We summarise our forecast changes below: the result for 2013 reflects our forecasts relative to actual results, showing OSRAM beat FY expectations by 4%. Figure 3: Post-results forecast changes
EURm Revenue SP OS L&C L&S Corp/rec Group revenue Adj EBITA SP OS L&C L&S Corp/rec Group EBITA Adj EBITA margin SP OS L&C L&S Group adj EBITA margin EBITA SP OS L&C L&S Corp/rec Group EBITA PBT Tax Net income Adj EPS Net debt Pension deficit Old estimates 2013E 2014E 2015E 1,463 1,014 2,615 552 (329) 5,314 241 122 143 (47) (53) 395 16.5% 12.1% 5.5% -8.5% 7.4% 227 122 (62) (90) (69) 118 74 (25) 48 2.38 13 414 1,514 1,065 2,641 526 (300) 5,446 244 119 118 5 (20) 454 16.1% 11.2% 4.5% 0.9% 8.3% 236 119 73 (15) (47) 354 312 (100) 211 2.85 (177) 414 1,567 1,118 2,692 552 (300) 5,629 245 122 156 32 (20) 523 15.6% 10.9% 5.8% 5.8% 9.3% 245 122 126 32 (20) 493 458 (137) 319 3.48 (569) 414 New estimates 2013E 2014E 2015E 1,456 1,018 2,600 561 (346) 5,289 246 125 127 (65) (34) 410 16.9% 12.3% 4.9% -11.6% 7.8% 219 124 (53) (128) (74) 100 50 (17) 34 2.44 (173) 359 1,467 1,062 2,662 561 (353) 5,400 233 139 162 (32) (52) 461 15.9% 13.1% 6.1% -5.7% 8.5% 233 139 82 (42) (62) 361 312 (103) 209 2.85 (328) 359 1,518 1,115 2,687 589 (371) 5,539 242 147 199 33 (52) 581 15.9% 13.2% 7.4% 5.6% 10.5% 242 147 165 33 (52) 547 502 (158) 344 3.77 (577) 359 Change (% or bps) 2013E 2014E 2015E -0.5% 0.4% -0.6% 1.7% 5.3% -0.5% -3.1% -0.2% 0.8% 6.8% 17.5% -0.8% -3.1% -0.2% -0.2% 6.8% 23.7% -1.6%

2.0% -4.6% -1.2% 2.2% 16.9% 20.2% -11.7% 36.9% 28.2% 39.3% -813.0% 3.2% -35.3% 160.0% 160.0% 3.8% 1.7% 11.2% 42 21 (61) (312) 32 (24) 192 160 (660) 21 31 224 164 (20) 121

-3.7% -1.3% -1.2% 1.2% 16.9% 20.2% -14.7% 11.7% 31.8% 43.1% 172.8% 3.2% 8.5% 31.9% 160.0% -15.4% 2.2% 11.1% -32.3% -34.4% -29.8% 2.3% 186 56 0.2% 3.3% -0.9% 0.1% 151 56 9.7% 15.2% 7.7% 8.3% 8 56

Source: Berenberg estimates, Note: 2013 OLD/New figures represent forecast and actual

Speciality Lighting: good momentum into 2014

Speciality Lighting continued to report a good performance in Q4 2013, outgrowing its end markets for the 16th consecutive quarter and reporting organic growth of 8%, driven by c20% growth within the LED components business. Looking to 2014, we expect the recovery of auto market volumes coupled with the switch to LED-based auto lighting to drive growth of 4-5%. Management expects operating margins to be close to 17% in Q1 2014, despite dilutive headwinds from the sale of LED components, which are expected to grow by between 10% and 20% in 2014. Divisional revenues are split 25% LED components, 30% aftermarket and 45% original equipment (OE).

OSRAM Licht AG
Small/Mid-Cap: Capital Goods & Industrial Engineering

Figure 4: Speciality Lighting financials (m)

2010 Revenue Grow th Price Volume Organic FX M&A Seasonality Sequential grow th EBITA Margin Incremental margin Seasonality EBITA ex items Margin 2011 2012 1,404.5 13% 2013 2014E 2015E 2016E 1,174.0 1,243.5 6% 1,455.8 1,466.8 1,518.1 1,571.2 3.7% 0.8% 3.5% 3.5% -2.3% -1.5% -1.5% 6.0% 5.0% 5.0% 5.3% 3.8% 3.5% 3.5% -1.6% -3.0% 0.0% 0.0% 100% 100% 100% 100%

9% 4% 0% 100%

193.0 16.4%

210.0 16.9% 24%

226.1 16.1% 10% 100% 239.6 17.1%

218.8 15.0% -14% 100% 246.0 16.9%

232.9 15.9% 129% 100% 232.9 15.9%

241.6 15.9% 17% 100% 241.6 15.9%

250.0 15.9% 16% 100% 250.0 15.9%

193.0 16.4%

210.0 16.9%

Source: Berenberg estimates, OSRAM

OSRAM Opto: benefiting from internal sales

OSRAM Opto is one of the worlds largest LED chip and package manufacturers, with a focus on high-power LEDs. The business is benefiting from the rapid growth of LED components for automotive applications and growth in general lighting applications. Higher capacity utilisation and less price pressure are supporting profitability. Management sees Q1 2014 revenues flat on Q4 2013, implying 16-17% nominal growth, although the 14.5% margin in Q4 2013 is considered high when compared with historical through-cycle margins of 11-12%. H2 2013 results benefited from the PUSH productivity programme, despite the 8-10% price pressure. Looking to 2014, management is budgeting for c10% pricing headwinds. Looking to 2014 and 2015, the division will see an increase of c40m capital investment, to be directed at expanding back-end production of light engines at the Wuxi factory. In comparison, front-end manufacture of chips and packages does not require additional investment, since nearly all production is now on 4 and 6 wafers, with a 50:50 split. There is further upside to capacity utilisation. At OSRAM Opto, we expect the internal revenue development to drive sales growth for the business. Inter-segment sales during 2013 were largely made to Speciality Lighting, where we expect growth for 2014 in the 10-20% range. In addition, OSRAM is aiming to increase the proportion of sales made to the Lamps & Components division.

OSRAM Licht AG
Small/Mid-Cap: Capital Goods & Industrial Engineering

Figure 5: OSRAM Opto financials (m)

2010 External rev % chg Inter-segment % chg Revenue Grow th Price Volume Organic FX M&A Seasonality Sequential grow th EBITA Margin Incremental margin Seasonality EBITA ex items Margin 2011 2012 584.7 2013 2014E 2015E 2016E

743.0

858.4 16%

653.9 642.8 633.0 616.5 11.8% -1.7% -1.5% -2.6% 314.4 364.5 419.2 482.1 554.4 15.9% 15.0% 15.0% 15.0% 899.1 1,018.4 1,062.0 1,115.1 1,170.9 5% 13.3% 4.3% 5.0% 5.0% -9.3% -7.0% -7.0% 16.0% 12.0% 12.0% 1% 13% 6.8% 5.0% 5.0% 4% -2.0% 0% 100% 100% 100% 100% 100%

166.0 22.3%

118.0 13.7%

76.2 8.5% 100%

123.8 12.2% 40% 100% 125.0 12.3%

139.0 13.1% 35% 100% 139.0 13.1%

147.0 13.2% 15% 100% 147.0 13.2%

152.4 13.0% 10% 100% 152.4 13.0%

166.0 22.3%

118.0 13.7%

76.2 8.5%

Source: Berenberg estimates, OSRAM

Lamps & Components: 2014 set to be a strong year

Since 2012, OSRAMs Lamps & Components division has incurred the majority of structural actions to cut costs and remove redundant capacity created via the obsolescence of technologies. This meant the division reported losses in 2012 and 2013. However, we expect a return to reported profitability in 2014, driven by payback from measures associated with the PUSH programme. Moreover, by 2016 we believe that margins within the division may have returned to levels comparable with Philips. In Q4 2013, revenue growth for the traditional lighting businesses came in close to zero, with almost 40% growth from the LED portfolio resulting in 2% growth for the division. Looking to Q1 2014, we anticipate strong growth of SSL revenues, supported by a large pipeline of planned new products. Looking to 2014, we believe the lamps market will show growth in halogen lamps, a flat development for fluorescent and strong growth of LED products. Against this backdrop, we believe OSRAM will be able to show nearly 5% underlying revenue growth, offset by FX-related headwinds. We see divisional revenue development as being in a sweet spot in 2014. Declines in traditional incandescent lamps are largely complete, the growth of halogen bulbs should be mid-single-digit, supported by substitution, and LED should grow strongly. Moreover, divisional profitability should benefit from restructuring in the prior year. We expect underlying operating margins for the division to rise above 6% in 2014.

OSRAM Licht AG
Small/Mid-Cap: Capital Goods & Industrial Engineering

Figure 6: Lamps & Components financials (m)

2012 Revenue Grow th Price Volume Organic FX M&A Seasonality Sequential grow th EBITA Margin Incremental margin Seasonality EBITA ex item s Margin Special items 2013 2014E 2,662 2.4% 0.8% 4.3% 5.0% -3% 0% 100% 2015E 2,687 0.9% 3.0% -2.1% 0.9% 0% 0% 100% 2016E 2,798 4.1% 3.0% 1.1% 4.1% 0% 0% 100%

2,785.7 2,599.9 -6.7% 3.0% -4% -1% -4% 100%

100%

(75.7) -2.7% 100% 54.3 1.9% 130.0

(52.6) -2.0% -12% 100% 126.6 4.9% 179.2

81.6 3.1% 216% 100% 161.6 6.1% 80.0

165.4 6.2% 336% 100% 199.4 7.4% 34.0

261.0 9.3% 86% 100% 261.0 9.3% 0.0

Source: Berenberg estimates, OSRAM

Luminaires & Solutions: heavy restructuring done

The Luminaires & Solutions division which consists of three main business areas: projects, service and luminaires suffered from poor performance during 2013 due to loss-making service activities in the US. Extensive negotiations with unions have now been concluded, allowing management to take the majority of restructuring charges into the 2013 results, which will affect 900 service personnel. Looking to 2014, we expect growth from the projects and luminaires businesses to offset planned business curtailment within the service activities, resulting in flat revenue development. We expect profitability to remain negative in H1 2014, before making a return to positive territory in H2 2014. Most importantly for the group, the period of high restructuring charges is complete, limiting additional risk for 2014. The revenue decline in 2013 was driven by a planned exit from loss-making service business in North America. In H2 2013, this decline was offset by growth of the professional luminaires business. We anticipate a return to profitability in 2015.

OSRAM Licht AG
Small/Mid-Cap: Capital Goods & Industrial Engineering

Figure 7: Luminaires & Solutions financials (m)

2012 Revenue Grow th Price Volume Organic FX M&A Seasonality Sequential grow th EBITA Margin Incremental margin Seasonality EBITA ex item s Margin Special items 602.1 2013 561.3 -6.8% 2014E 561.3 0.0% 0.0% 1.0% 1.0% -1.1% 100% 2015E 589.4 5.0% 2.0% 3.0% 5.0% 0.0% 100% 2016E 618.9 5.0% 2.0% 3.0% 5.0% 0.0% 100%

-4.8% -2.0% 100% 100%

(81.6) -13.6% 100% (31.6) -5.2% 50

(128.3) -22.9% 114% 100% (65.0) -11.6% 63

(42.2) -7.5% 358612% 100% (32.2) -5.7% 10

33.2 5.6% 269% 100% 33.2 5.6% 0

48.5 7.8% 52% 100% 48.5 7.8% 0

Source: Berenberg estimates, OSRAM

Corporate reconciliation and pensions

OSRAMs Corporate reconciliation line has been steadily increasing since 2012. The divisional charge incorporates central costs, pension expenses and OLEDrelated costs. In 2012, the underlying result was a c5m credit. By 2013, this had increased to 22m of costs. Looking to 2014, we expect this to have increased to a c40m charge. In 2014 the breakdown of the charge is expected to be 15m for pensions, 15m linked to OLED costs and c10m for legal and spin-off related costs. Other corporate expenses are allocated to the divisions.

OSRAM Licht AG
Small/Mid-Cap: Capital Goods & Industrial Engineering

Cash and balance sheet outlook

In 2013, OSRAMs FY free cash flow development was strong, enabling a better net cash position at year-end than we had expected. Looking to 2014, a number of headwinds linked to higher investments and restructuring costs will reduce reported free cash flow. Management has indicated that capex will increase from 207m in 2013 to between 270m and 300m for 2014. It is likely to stay at this higher level in 2015, due to investments within OSRAM Optos back-end facilities. The company also sees cash costs for restructuring increasing from 120m in 2013 (2012: 40m) to 170m-200m in 2014, before falling towards 50m in 2015. If the company is able to further improve its management of working capital, we believe OSRAM may be able to generate between 150m and 200m of free cash flow in 2014, lifting the year-end cash balance to more than 300m. Figure 8: OSRAM capex development (m)
Capex Speciality Lighting Opto Semiconductor General Lighting Lamps & Components Luminaires and Solutions Other Total capex % of D&A excl GW impairments % sales 2010 24.0 138.0 87.0 2011 36.0 157.0 110.0 2012 43.0 62.0 76.0 2013 37.8 62.8 97.4 86.9 10.5 9.4 207.4 61% 3.9% 2014 45.0 130.0 102.0 90.0 12.0 14.6 291.6 83% 5.4% 2015 45.0 110.0 143.6 85.0 12.0 6.0 304.6 85% 5.5% 2016 45.0 110.0 98.6 85.0 12.0 6.0 259.6 75% 4.5%

5.0 253.0 102% 5%

10.0 312.0 123% 6%

6.0 187.0 45% 3%

Source: Berenberg estimates, OSRAM

The development of net cash in 2014 should benefit from the absence of needing to pay a dividend. However, within 12 months, as restructuring pressures decline, we believe the pressure to begin a process of capital allocation with a view to M&A will accelerate. Figure 9: OSRAM net debt development (m)
Debt Net debt per Osram Short term debt Long term debt Liabilities to Siemens from financing activities Total debt Cash and cash equivalents AFS assets Receivables from Siemens from financing activities Total liquidity Net debt Pensions Credit guarantees Adjusted net debt 2010 2011 2012 2013E 2014E 2015E 2016E

25.0 22.0 47.0 5.0 4.0 1.0 596.3 1,343.7 1,198.1 626.3 1,369.7 1,246.1 19.0 44.0 32.0 0.7 0.7 0.7 486.7 535.8 619.4 506.4 580.5 652.1 119.9 789.2 594.0 881.0 834.0 490.0 5.9 1.0 10.5 1,006.8 1,624.2 1,094.5

55.9 295.0 350.9 522.9 0.7 523.6 (172.7) 358.5 10.5 196.3

55.9 295.0 350.9 678.6 0.7 679.3 (328.4) 358.5 10.5 40.6

55.9 295.0 350.9 927.2 0.7 927.9 (577.0) 358.5 10.5 (208.0)

55.9 295.0 350.9 1,276.0 0.7 1,276.7 (925.8) 358.5 10.5 (556.8)

Source: Berenberg estimates, OSRAM

OSRAM Licht AG
Small/Mid-Cap: Capital Goods & Industrial Engineering

Financials
Figure 10: OSRAM divisional forecast (m)
Revenue (EURm) Speciality Lighting OSRAM Opto General Lighting Lamps & components Luminaires & solutions Corp/rec Group 2010 1,174 743 2,944 2011 1,244 858 3,164 2012 1,405 899 3,388 2,786 602 (291) 5,400 2013E 1,456 1,018 3,161 2,600 561 (346) 5,289 2014E 1,467 1,062 0 2,662 561 (353) 5,400 2015E 1,518 1,115 0 2,687 589 (371) 5,539

(182) 4,679

(235) 5,031

Reported revenue growth (EURm) Speciality Lighting OSRAM Opto General Lighting Lamps & components Luminaires & solutions Corp/rec Group

2010

2011 5.9% 15.5% 7.5%

2012 12.9% 4.7% 7.1%

29.1% 7.5%

23.9% 7.3%

2013E 3.7% 13.3% -6.7% -6.7% -6.8% 19.0% -2.1%

2014E 0.8% 4.3% 0.0% 2.4% 0.0% 1.8% 2.1%

2015E 3.5% 5.0% 0.0% 0.9% 5.0% 5.2% 2.6%

EBITA (EURm) Speciality Lighting OSRAM Opto General Lighting Lamps & components Luminaires & solutions Corp/rec Group

2010 193 166 232

2011 210 118 107

(8) 583

2 437

2012 226 76 (184) (76) (82) (65) 53

2013E 219 124 (193) (53) (128) (62) 100

2014E 233 139 0 82 (42) (50) 361

2015E 242 147 0 165 33 (40) 547

EBITA margin (EURm) Speciality Lighting OSRAM Opto General Lighting Lamps & components Luminaires & solutions Corp/rec Group

2010 16.4% 22.3% 7.9%

2011 16.9% 13.7% 3.4%

4.4% 12.5%

-0.9% 8.7%

2012 16.1% 8.5% -5.4% -2.7% -13.6% 22.4% 1.0%

2013E 15.0% 12.2% -6.1% -2.0% -22.9% 18.0% 1.9%

2014E 15.9% 13.1% 0.0% 3.1% -7.5% 14.2% 6.7%

2015E 15.9% 13.2% 0.0% 6.2% 5.6% 10.8% 9.9%

Source: Berenberg estimates, OSRAM

10

OSRAM Licht AG
Small/Mid-Cap: Capital Goods & Industrial Engineering

Figure 11: Group P&L (m)

Profit and loss (EURm) Sales Growth COGS Gross profit Margin Other Opex EBIT Margin Amortisation/other EBITA Margin Depreciation EBITDA Margin Financial result EBT Taxes Net Income (cont ops) Minorities Net attributable (cont ops) Reported net income EPS Growth Adj EPS Growth 335 2010 4,680 0.0% (3,082) 1,598 34.1% (1,034) 564 12.0% 18 583 12.5% 230 812 17.4% 2011 5,031 7.5% (3,419) 1,613 32.1% (1,195) 417 8.3% 20 437 8.7% 233 670 13.3% (42) 376 (130) 246 3 243 243 2012 5,400 7.3% (3,999) 1,401 25.9% (1,663) (262) -4.9% 313 51 0.9% 342 395 7.3% (82) (367) (32) (391) 1 (392) (392) 2013E 5,289 -2.1% (3,797) 1,492 28.2% (1,419) 73 1.4% 27 100 1.9% 314 414 7.8% (22) 50 (17) 34 6 28 28 0.26 2014E 5,400 2.1% (3,710) 1,690 31.3% (1,356) 334 6.2% 27 361 6.7% 324 685 12.7% (22) 312 (103) 209 1 208 208 1.99 654% 2.85 17% 2015E 5,539 2.6% (3,755) 1,783 32.2% (1,264) 520 9.4% 28 547 9.9% 332 880 15.9% (17.7) 501.9 (158.1) 343.8 1.0 342.8 342.8 3.27 64.7% 3.77 32.2%

2.44 0%

Source: Berenberg estimates, OSRAM

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OSRAM Licht AG
Small/Mid-Cap: Capital Goods & Industrial Engineering

Figure 12: Group balance sheet and cash flow summary

Balance sheet (EURm) Intangible assets Plant, property and equipment Other Non-current assets Cash Other current assets Current assets Total assets Shareholders' equity Non-current debt Other non-current liabilities Total non-current liabilities Current debt Other current liabilities Total current liabilities Total liabilities and shareholders' equity Source: Company data, Berenberg estimates 2010 214 1,391 549 2,154 19 2,279 2,298 4,452 1,470 5 1,018 1,023 25 1,934 1,959 4,452 2011 400 1,532 509 2,441 44 2,643 2,687 5,128 1,457 4 1,019 1,023 22 2,627 2,649 5,129 2012 144 1,336 566 2,046 32 2,990 3,022 5,068 1,946 1 661 662 47 2,413 2,460 5,068 2013E 155 1,133 545 1,832 523 2,024 2,593 4,425 2,169 295 497 792 56 1,314 1,464 4,425 2014E 128 1,100 545 1,773 679 2,095 2,821 4,594 2,405 295 497 792 56 1,340 1,396 4,594 2015E 100 1,073 545 1,717 927 2,144 3,118 4,835 2,629 295 497 792 56 1,358 1,414 4,835

Cash flow (EURm) Net income D&A Other items Change in working capital Cashflow from operations Capex M&A Purchase of investments Proceeds from sales & disposals Cashflow from investments Dividends paid Cashflow from financing Net cash flow

2010 335 248 190 (83) 690 (253) (36) (41) 4 (326)

2011 246 253 68 (299) 268 (312) (125) (11) 7 (441)

2012 (391) 655 (470) 157 (49) (187) (40) (24) 48 (203)

2013E 34 341 (4) (42) 492 (207) 1 (39) 41 (205)

2014E 209 351 18 (46) 447 (292) 0 0 0 (292) 0 0 156

2015E 344 360 13 (31) 636 (305) 0 0 0 (305) (83) (83) 249

(363)

200

224

214 491

Source: Berenberg estimates, OSRAM. Note: forecast working capital movements within chgs in assets + liabilities

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OSRAM Licht AG
Small/Mid-Cap: Capital Goods & Industrial Engineering

Figure 13: OSRAM Profile

OSRAM Company Profile

L&S 9.8%

Sales split
SP 25.5% L&C 32.2%

Adj EBITA split

L&S -6.4%

SP 46.5%

L&C 46.3%

OS 18.5%
OS 27.7%

Sales by geography
APAC 24% Retail 13%
EMEA 41%

AFTM (SP) 9%

Sales channels
OEM 30%

Americas 34% 2014E EURm Sales 12-'15E growth Adj EBITA margin % total Products Speciality Lighting 1,467 2.6% 233 15.9% 25.5% Lighting systems for automotive display/optic applics Philips GE OSRAM Opto 1,062 4.8% 139 13.1% 18.5% LED chips & packages, infrared products Philips Lumileds, Cree Nichia, Samsung, Epistar, Seoul Semi Lamps & Components 2,662 2.5% 162 6.1% 46.3% Traditional & SSL lamps, ballasts, LED converters, controls Philips, GE, Panasonic Zumtobel

Trade 40%
Luminaires & Solutions 561 3.3% (32) -5.7% 9.8% Luminaires, solutions, systems, energy audits, services Acuity, Philips, Hubbell, Zumtobel Fagerhult, Trilux

Electronic distrib'rs 8% Corp/Recon (353) 4.1% (52) 14.7% inc. OLED costs Group 5,400 2.9% 461 8.5%

Competitors

Management team CEO Wolfgang Dehen CFO Dr Klaus Patzak CTO Dr Peter Laier

CEO since April 2011, previously head of Siemens Energy sector CFO since April 2011, previously held a number of finance roles in Siemens CTO since Jan 2013, previously at Continental in various mgmt roles

Source: Berenberg estimates, OSRAM

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OSRAM Licht AG
Small/Mid-Cap: Capital Goods & Industrial Engineering

Contacts: Investment Banking

EQUITY RESEARCH AUTOMOTIVES Adam Hull BANKS Nick Anderson James Chappell Andrew Lowe Eoin Mullany Eleni Papoula Michelle Wilson BEVERAGES Philip Morrisey Josh Puddle +44 20 3465 2749 DIVERSIFIED FINANCIALS Pras Jeyanandhan Benjamin Slingsby FOOD MANUFACTURING Fintan Ryan James Targett FOOD RETAIL Andrew Steele E-mail: firstname.lastname@berenberg.com; Internet www.berenberg.com MID CAP GENERAL +44 20 3207 7899 Robert Chantry +44 20 3207 7861 +44 20 3465 2626 Gunnar Cohrs +44 20 3207 7894 Bjoern Lippe +44 20 3207 7845 Anna Patrice +44 20 3207 7863 +44 20 3465 2748 Stanislaus von Thurn und Taxis +44 20 3465 2631 +44 20 3207 7873 OIL & GAS Asad Farid +44 20 3207 7932 +44 20 3207 7926 Jaideep Pandya +44 20 3207 7890 REAL ESTATE Kai Klose Estelle Weingrod TECHNOLOGY Adnaan Ahmad Sebastian Grabert Daud Khan Ali Farid Khwaja Tammy Qiu TELECOMMUNICATIONS Wassil El Hebil Usman Ghazi Laura Janssens Paul Marsch Barry Zeitoune TOBACCO Erik Bloomquist Kate Kalashnikova UTILITIES Andrew Fisher Oliver Salvesen Lawson Steele

+44 20 3207 7838 +44 20 3207 7844 +44 20 3465 2743 +44 20 3207 7854 +44 20 3465 2741 +44 20 3465 2663

+44 20 3207 7892 +44 20 3207 7881

GENERAL RETAIL & LUXURY GOODS Bassel Choughari +44 20 3465 2675 John Guy +44 20 3465 2674 Bethany Hocking +44 20 3207 7925 HEALTHCARE Scott Bardo Alistair Campbell Charles Cooper Graham Doyle Tom Jones Louise Pearson

+44 20 3207 7888 +44 20 3207 7931

BUSINESS SERVICES, LEISURE & TRANSPORT Najet El Kassir +44 20 3207 7836 Stuart Gordon +44 20 3207 7858 Simon Mezzanotte +44 20 3207 7917 Matthew O'Keeffe +44 20 3207 7895 Arash Roshan Zamir +44 20 3465 2636 CAPITAL GOODS Benjamin Glaeser William Mackie Margaret Paxton Alexander Virgo Felix Wienen CHEMICALS John Klein Evgenia Molotova Jaideep Pandya CONSTRUCTION Barnaby Benedict Chris Moore Robert Muir Michael Watts

+44 20 3207 7869 +44 20 3207 7876 +44 20 3465 2637 +44 20 3465 2634 +44 20 3207 7877 +44 20 3465 2747

+44 20 3207 7851 +44 20 3207 7834 +44 20 3465 2638 +44 20 3207 7852 +44 20 3465 2673

+44 20 3207 7918 +44 20 3207 7837 +44 20 3207 7934 +44 20 3207 7856 +44 20 3207 7915

HOUSEHOLD & PERSONAL CARE Bassel Choughari +44 20 3465 2675 James Targett +44 20 3207 7873 INSURANCE Tom Carstairs Peter Eliot Kai Mueller Matthew Preston Sami Taipalus MEDIA Robert Berg Emma Coulby Laura Janssens Sarah Simon

+44 20 3207 7862 +44 20 3207 7824 +44 20 3465 2639 +44 20 3207 7857 +44 20 3207 7859

+44 20 3207 7930 +44 20 3465 2664 +44 20 3207 7890

+44 20 3207 7823 +44 20 3207 7880 +44 20 3465 2681 +44 20 3207 7913 +44 20 3207 7866

+44 20 3207 7870 +44 20 3465 2665

+44 20 3465 2669 +44 20 3465 2737 +44 20 3207 7860 +44 20 3207 7928

+44 20 3465 2680 +44 20 3207 7821 +44 20 3465 2639 +44 20 3207 7830

+44 20 3207 7937 +44 20 3207 7818 +44 20 3207 7887

ECONOMICS Holger Schmieding EQUITY SALES SPECIALIST SALES BANKS Iro Papadopoulou CONSUMER Rupert Trotter HEALTHCARE Frazer Hall INDUSTRIALS Chris Armstrong INSURANCE Trevor Moss TECHNOLOGY Jean Beaubois TELECOMMUNICATIONS Julia Thannheiser UTILITIES Benita Barretto SALES BENELUX Miel Bakker Susette Mantzel Alexander Wace FRANKFURT Michael Brauburger Nina Buechs Andr Grosskurth Boris Koegel Joerg Wenzel

+44 20 3207 7889

Christian Schulz

+44 20 3207 7878

Robert Wood

+44 20 3207 7822

+44 20 3207 7924

+44 20 3207 7815

+44 20 3207 7875

+44 20 3207 7809

+44 20 3207 7893

+44 20 3207 7835

SALES LONDON John von Berenberg-Consbruch Matt Chawner Toby Flaux Karl Hancock Sean Heath James Hipkiss David Hogg Zubin Hubner Ben Hutton James Matthews David Mortlock Peter Nichols Richard Payman George Smibert Anita Surana Paul Walker Alexander Woodgate PARIS Miel Bakker Dalila Farigoule Clmence La Clavire-Peyraud Olivier Thibert SCANDINAVIA Ronald Bernette Marco Weiss ZURICH Stephan Hofer Carsten Kinder Gianni Lavigna James Nettleton Benjamin Stillfried

E-mail: firstname.lastname@berenberg.com; Internet www.berenberg.com SALES TRADING HAMBURG +44 20 3207 7805 Paul Dontenwill +49 40 350 60 563 +44 20 3207 7847 Peter Dorawa +49 40 350 60 761 +44 20 3465 2745 Alexander Heinz +49 40 350 60 359 +44 20 3207 7803 Gregor Labahn +49 40 350 60 571 +44 20 3465 2742 Chris McKeand +49 40 350 60 798 +44 20 3465 2620 Fin Schaffer +49 40 350 60 596 +44 20 3465 2628 Lars Schwartau +49 40 350 60 450 +44 20 3207 7885 Marvin Schweden +49 40 350 60 576 +44 20 3207 7804 Tim Storm +49 40 350 60 415 +44 20 3207 7807 Philipp Wiechmann +49 40 350 60 346 +44 20 3207 7850 +44 20 3207 7810 LONDON +44 20 3207 7825 Mike Berry +44 20 3465 2755 +44 20 3207 7911 Stewart Cook +44 20 3465 2752 +44 20 3207 7855 Simon Messman +44 20 3465 2754 +44 20 3465 2632 +44 20 3465 2625 SOVEREIGN WEALTH FUNDS Max von Doetinchem +44 20 3207 7826 +33 1 5844 9505 +33 1 5844 9510 +33 1 5844 9521 +33 1 5844 9512 CRM Laura Cooper Greg Swallow CORPORATE ACCESS Jennie Jiricny +44 20 3207 7828 +49 40 350 60 719 EVENTS Charlotte Kilby Natalie Meech Charlotte Reeves Sarah Weyman Hannah Whitehead

+44 20 3465 2676

+44 20 3207 7829

+44 20 3207 7806 +44 20 3207 7833

+44 20 3207 7886

+33 1 5844 9505 +49 40 350 60 694 +44 20 3465 2670

+49 69 91 30 90 741 +49 69 91 30 90 735 +49 69 91 30 90 734 +49 69 91 30 90 740 +49 69 91 30 90 743

+41 44 283 2029 +41 44 283 2024 +41 44 283 2038 +41 44 283 2026 +41 44 283 2033

+44 20 3207 7832 +44 20 3207 7831 +44 20 3465 2671 +44 20 3207 7801 +44 20 3207 7922

US SALES BERENBERG CAPITAL MARKETS LLC Member FINRA & SIPC Colin Andrade +1 617 292 8230 Kelleigh Faldi Cathal Carroll +1 646 445 7206 Andrew Holder Burr Clark +1 617 292 8282 Emily Mouret Julie Doherty +1 617 292 8228 Kieran O'Sullivan

E-mail: firstname.lastname@berenberg-us.com; Internet www.berenberg.com +1 617 292 8288 +1 617 292 8222 +1 646 445 7204 +1 617 292 8292 Jonathan Paterson Jonathan Saxon +1 646 445 7212 +1 646 445 7202

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OSRAM Licht AG
Small/Mid-Cap: Capital Goods & Industrial Engineering

Please note that the use of this research report is subject to the conditions and restrictions set forth in the General investment-related disclosures and the Legal disclaimer at the end of this document. For analyst certification and remarks regarding foreign investors and country-specific disclosures, please refer to the respective paragraph at the end of this document.

Disclosures in respect of section 34b of the German Securities Trading Act (Wertpapierhandelsgesetz WpHG)
Company OSRAM Licht AG (1) (2) (3) (4) (5) Disclosures 1, 3, 5

Joh. Berenberg, Gossler & Co. KG (hereinafter referred to as the Bank) and/or its affiliate(s) was Lead Manager or Co-Lead Manager over the previous 12 months of a public offering of this company. The Bank acts as Designated Sponsor for this company. Over the previous 12 months, the Bank and/or its affiliate(s) has effected an agreement with this company for investment banking services or received compensation or a promise to pay from this company for investment banking services. The Bank and/or its affiliate(s) holds 5% or more of the share capital of this company. The Bank holds a trading position in shares of this company.

Historical price target and rating changes for OSRAM Licht AG in the last 12 months (full coverage) Date 09 July 13 01 August 13 17 October 13 15 November 13 Price target - EUR 35.00 37.00 41.50 46.70 Rating Buy Buy Buy Buy Initiation of coverage 09 July 13

Berenberg distribution of ratings and in proportion to investment banking services Buy Sell Hold 40.89 % 17.47 % 41.64 % 53.57 % 10.71 % 35.71 %

Valuation basis/rating key

The recommendations for companies analysed by Berenbergs Equity Research department are made on an absolute basis for which the following three-step rating key is applicable: Buy: Sustainable upside potential of more than 15% to the current share price within 12 months; Sell: Sustainable downside potential of more than 15% to the current share price within 12 months; Hold: Upside/downside potential regarding the current share price limited; no immediate catalyst visible. NB: During periods of high market, sector, or stock volatility, or in special situations, the recommendation system criteria may be breached temporarily.

Competent supervisory authority

Bundesanstalt fr Finanzdienstleistungsaufsicht -BaFin- (Federal Financial Supervisory Authority), Graurheindorfer Strae 108, 53117 Bonn and Marie-Curie-Str. 24-28, 60439 Frankfurt am Main, Germany.

General investment-related disclosures

Joh. Berenberg, Gossler & Co. KG (hereinafter referred to as the Bank) has made every effort to carefully research all information contained in this financial analysis. The information on which the financial analysis is based has been

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OSRAM Licht AG
Small/Mid-Cap: Capital Goods & Industrial Engineering

obtained from sources which we believe to be reliable such as, for example, Thomson Reuters, Bloomberg and the relevant specialised press as well as the company which is the subject of this financial analysis. Only that part of the research note is made available to the issuer (who is the subject of this analysis) which is necessary to properly reconcile with the facts. Should this result in considerable changes a reference is made in the research note. Opinions expressed in this financial analysis are our current opinions as of the issuing date indicated on this document. The companies analysed by the Bank are divided into two groups: those under full coverage (regular updates provided); and those under screening coverage (updates provided as and when required at irregular intervals). The functional job title of the person/s responsible for the recommendations contained in this report is Equity Research Analyst unless otherwise stated on the cover. The following internet link provides further remarks on our financial analyses: http://www.berenberg.de/research.html?&L=1&no_cache=1

Legal disclaimer
This document has been prepared by Joh. Berenberg, Gossler & Co. KG (hereinafter referred to as the Bank). This document does not claim completeness regarding all the information on the stocks, stock markets or developments referred to in it. On no account should the document be regarded as a substitute for the recipient procuring information for himself/herself or exercising his/her own judgements. The document has been produced for information purposes for institutional clients or market professionals. Private customers, into whose possession this document comes, should discuss possible investment decisions with their customer service officer as differing views and opinions may exist with regard to the stocks referred to in this document. This document is not a solicitation or an offer to buy or sell the mentioned stock. The document may include certain descriptions, statements, estimates, and conclusions underlining potential market and company development. These reflect assumptions, which may turn out to be incorrect. The Bank and/or its employees accept no liability whatsoever for any direct or consequential loss or damages of any kind arising out of the use of this document or any part of its content. The Bank and/or its employees may hold, buy or sell positions in any securities mentioned in this document, derivatives thereon or related financial products. The Bank and/or its employees may underwrite issues for any securities mentioned in this document, derivatives thereon or related financial products or seek to perform capital market or underwriting services.

Analyst certification

I, William Mackie, hereby certify that all of the views expressed in this report accurately reflect my personal views about any and all of the subject securities or issuers discussed herein. In addition, I hereby certify that no part of my compensation was, is, or will be, directly or indirectly related to the specific recommendations or views expressed in this research report, nor is it tied to any specific investment banking transaction performed by the Bank or its affiliates. I, Margaret Paxton, hereby certify that all of the views expressed in this report accurately reflect my personal views about any and all of the subject securities or issuers discussed herein. In addition, I hereby certify that no part of my compensation was, is, or will be, directly or indirectly related to the specific recommendations or views expressed in this research report, nor is it tied to any specific investment banking transaction performed by the Bank or its affiliates.

Remarks regarding foreign investors

The preparation of this document is subject to regulation by German law. The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

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OSRAM Licht AG
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United Kingdom

This document is meant exclusively for institutional investors and market professionals, but not for private customers. It is not for distribution to or the use of private investors or private customers.

United States of America

This document has been prepared exclusively by the Bank. Although Berenberg Capital Markets LLC, an affiliate of the Bank and registered US broker-dealer, distributes this document to certain customers, Berenberg Capital Markets LLC does not provide input into its contents, nor does this document constitute research of Berenberg Capital Markets LLC. In addition, this document is meant exclusively for institutional investors and market professionals, but not for private customers. It is not for distribution to or the use of private investors or private customers. This document is classified as objective for the purposes of FINRA rules. Please contact Berenberg Capital Markets LLC (+1 617.292.8200), if you require additional information.

Third-party research disclosures Company

OSRAM Licht AG (1) (2) (3) (4) (5)

Disclosures
no disclosures

Berenberg Capital Markets LLC owned 1% or more of the outstanding shares of any class of the subject company by the end of the prior month.* Over the previous 12 months, Berenberg Capital Markets LLC has managed or co-managed any public offering for the subject company.* Berenberg Capital Markets LLC is making a market in the subject securities at the time of the report. Berenberg Capital Markets LLC received compensation for investment banking services in the past 12 months, or expects to receive such compensation in the next 3 months.* There is another potential conflict of interest of the analyst or Berenberg Capital Markets LLC, of which the analyst knows or has reason to know at the time of publication of this research report.

* For disclosures regarding affiliates of Berenberg Capital Markets LLC please refer to the Disclosures in respect of section 34b of the German Securities Trading Act (Wertpapierhandelsgesetz WpHG) section above.

Copyright

The Bank reserves all the rights in this document. No part of the document or its content may be rewritten, copied, photocopied or duplicated in any form by any means or redistributed without the Banks prior written consent. May 2013 Joh. Berenberg, Gossler & Co. KG

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