Philips splits off lighting solutions to create “market leading” company

Philips has announced the creation of two market-leading companies focused on lighting solutions and ‘HealthTech’ opportunities. 

“I do appreciate the magnitude of the decision we are taking, but the time is right to take the next strategic step for Philips, as we continue on our transformation,” said Frans van Houten, Chief Executive Officer of Royal Philips.

“Both companies will be able to make the appropriate investments to boost growth and drive profitability, ultimately generating significantly more value for our customers, employees and shareholders.”

The lighting solutions business, already the global leader in lighting and serving a growing market estimated to exceed EUR 60 billion, will be better positioned to capitalise on the fundamental changes taking place in the lighting industry, in which the value is shifting from individual products to systems and services, the company says.

In a press statement, Philips said: “As a stand-alone company, the lighting solutions business will benefit from improved speed and agility in its operations to deliver innovation and capital market access to boost growth in connected LED lighting systems and services, more than offsetting the decline of conventional lighting.

“The creation of the lighting solutions company follows the recently announced plan to combine Philips’ Lumileds (LED components) and automotive lighting businesses into a stand-alone lighting components company.”

Philips is now starting the process to transition its Lighting solutions business into a separate legal structure.

Each company will have a dedicated, focused and “lean management structure” which is expected to make savings of EUR 100 million in 2015 and further EUR 200 million in 2016.