Philips to separate its LED parts arm

By Toby Sterling, Associated Press | Posted - Jun. 30, 2014 at 1:20 a.m.



This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.

AMSTERDAM (AP) — 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 colors 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."

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Toby Sterling

    SIGN UP FOR THE KSL.COM NEWSLETTER

    Catch up on the top news and features from KSL.com, sent weekly.
    By subscribing, you acknowledge and agree to KSL.com's Terms of Use and Privacy Policy.

    KSL Weather Forecast