Philips Restructures Its Lighting Division

According to reports, Philips is accelerating the restructuring of its lighting division, primarily because as the prices of LED lighting products gradually approach those of traditional bulbs, more and more consumers tend to choose more energy-efficient LED lighting products.

Therefore, Philips will increase the investment in restructuring costs. The restructuring costs for the second half of 2014 will rise from 100 million euros (approximately 838 million RMB) to 170 million euros (approximately 1.424 billion RMB). The restructuring projects include scaling down the production of traditional lighting products and may even involve closing traditional luminaire manufacturing plants.

As countries around the world ban incandescent lamps, the LED market is booming even further. However, increasingly fierce price wars continue to erode the profits of major manufacturers including Philips and Osram. Philips released its second-quarter 2014 financial report yesterday, with total revenue declining 6%. The company attributed the revenue decline to falling prices of LED bulbs and reduced sales of traditional lighting products.

　　Philips stated that it is still too early to talk about the impact of this restructuring, but the company has already sold or closed some of its incandescent lamp manufacturing plants.

　　In addition, the company will continue to focus on LED connected systems and services. The company decided to integrate its LED components and automotive lighting divisions into an independent company, with the aim of expanding its leading portfolio of digital lighting components to better serve consumers and Philips itself. Driven by growing demand for energy-saving and digital control, lighting is continuously gaining greater growth potential.

　　Yesterday, Philips released its Q2 financial report, showing that Philips' Q2 2014 revenue decreased 6% year-on-year to EUR 5.293 billion; EBITA (Earnings Before Interest, Taxes and Amortization) decreased 30.95% year-on-year to EUR 415 million; net profit decreased 23.34% year-on-year to EUR 243 million.