Philips to Set Up Stand-Alone Lighting Company
Dutch Company Seeks Investors for Its Lumileds and Automotive Lighting Business
"Philips intends to remain a shareholder and customer of the new company and will continue the existing innovation collaboration," the Dutch electronics and health care company said.
Philips, whose products range from kitchen appliances to hospital scanners, reported recently that first-quarter net profit fell 14% from a year earlier, hurt by currency losses and a weaker performance from health care. It said the year had got off to a difficult start because of weakening demand in China and Russia, and that the rest of 2014 was likely to be challenging.
It said at the time that sales slipped 5% to €5.02 billion ($6.85 billion) from €5.26 billion in the first quarter of 2013. Stripping out currency effects, sales were flat on an annual basis, with growth at Philips's consumer electronics business, flat sales at the lighting business and a decline in sales at its health care business.
It said it would slash costs by €1.5 billion this year as part of a continuing restructuring plan.
"Guided by our long-term strategy, we continue to actively manage our portfolio of businesses," Chief Executive Frans van Houten said Monday.
He said Philips wants to intensify its focus on connected LED lighting systems and services, LED luminaires, and LED lamps for professional and consumer markets.
"Both our Lumileds and Automotive lighting businesses are strong players in the lighting industry and ready to pursue more growth and scale, independently of Philips Lighting. As a world-leading lighting components business, they will have increased flexibility to attract additional investors to accelerate growth," he said.
Sales of the businesses being combined were approximately €1.4 billion in 2013. The new unit's CEO will be Pierre-Yves Lesaicherre, the current head of Lumileds.
The process is expected to be completed in the first half of 2015 and setting up the combined business is expected to cost €30 million in the second half of 2014.