Philips lights 'for sale' sign for LED parts business; arm had $1.91 billion in sales in 2013
AMSTERDAM - Royal Philips NV said Monday it plans to spin off its fast-growing LED parts business into a separate company, to win new customers and to capitalize as manufacturers integrate LED lights into an ever-widening array of products.
Philips, the world's largest lighting producer, says the separation will be complete by early 2015 but it is not clear yet whether the division will seek a separate listing, or if it will remain within Philips for a time before it is sold. Philips executive Pierre-Yves Lesaicherre, who currently heads the parts division, will remain as CEO of the new company.
LED sales are surging, as they can be programmed to emit light of different colours and need less energy than traditional lights. Manufacturers such as Philips, General Electric and Cree of the United States, as well as Germany's Osram, which was spun off from Siemens last year, all saw their LED sales rise at well above double digit rates in 2013, even as the price per bulb fell.
Philips' LED parts business, which is a major supplier to carmakers, had sales of 1.4 billion euros ($1.91 billion) in 2013.
Philips is prepared to become a minority shareholder in the parts business and will remain a big customer as it continues to sell its own branded lights and services, said Philips Chief Executive Frans van Houten.
Van Houten said the spin-off was not due to concerns LEDs themselves are becoming a commodity, despite recent price declines.
"I can assure you it is a very sound business with great margins and good profitability," he said. "At this stage, given the strong intellectual property and differentiation" of Philips' LEDs, "we think we can compete very well with Asian competitors."
Read more Business News
- A letter from the LCBPenticton / S. Okanagan
- City, CUPE break off talksKelowna
- Sh*t Parkers of KelownaKelowna
|QHR Technologies Inc||1.22||+0.02|
|Anavex Life Sciences||0.26||-0.0075|
|Copper Mountain Mining||2.83||-0.03|
|Sunrise Resources Ltd||0.03||-0.005|
|Mission Ready Services||0.15||-0.005|
Photo: Thinkstock.comWays to reduce your Debt:Make a budget and get budget counselingA basic first step for debt reduction is to prepare a budget and plan your spending. Once you have a budget, you mu...
The Big Picture Geopolitical tensions rattle markets The spectre of rising geopolitical tensions in Ukraine and Gaza cast a shadow over an otherwise positive week in the markets. News that a passenger...
Photo: ContributedI have the pleasure of witnessing people delegate tasks quite often. Sometimes with tremendous success and sometimes with disastrous consequences. I have chaired a lot of committees...