Royal Philips announced today at a London meeting with investors and analysts that it would separate its HealthTech and Lighting Solutions businesses into two separate companies, The Philips Lighting Solutions business has annual sales of EUR 7 billion (approximately US $9 billion) excluding the company’s Lumileds (LED components) and Automotive lighting businesses, which were recently spun off into another separate lighting business.
Frans van Houten, CEO of Royal Philips said in a press release, “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, To become the global leader in HealthTech and shape the future of the industry, we will combine our vibrant Healthcare and Consumer Lifestyle businesses into one company. At the same time, giving independence to our Lighting solutions business will better enable it to expand its global leadership position and venture into adjacent market opportunities. 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 press release said Philips’ Lighting Solutions business, already the global leader in lighting and serving a growing market estimated to exceed EUR 60 billion (approximately US $77.1 billion), will be better positioned to capitalize on the fundamental changes taking place in the lighting industry, in which the value is shifting from individual products to systems and services. 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.