LED sales up 28% at Philips

22 Jul 2013

Solid-state technology now represents one-quarter of Philips' overall lighting sales.

Electronics giant Philips has reported another increase in sales of LED products, as the transition to solid-state lighting (SSL) appears to gather momentum.

The Netherlands-headquartered company, which has been striving to improve its overall profitability and has cut employee numbers by more than 5500 over the past couple of years, said that lighting sales in the second quarter of 2013 were up 2% on the same period in 2012.

That was thanks partly to stronger sales of automotive lighting, but encouragingly for the LED sector, which has been suffering from a global capacity glut, sales from Philips’ LED chip making subsidiary Lumileds are also growing at a “reasonable” pace, in the words of Philips CEO Frans van Houten.

Since last year, LED-related revenues at Philips have jumped 28%, and solid-state lighting technology now accounts for around a quarter of the lighting division’s overall sales – which have amounted to some €8.4 billion over the past 12 months.

That SSL proportion has increased from around one-fifth a year ago, although the rate of year-on-year growth in the latest quarter did slow from the 37% reported for the first three months of 2013.

In the latest quarter, total lighting sales were €2.048 billion, while a divisional headcount reduction of 3600 has helped profitability. As a result, the division’s earnings before interest, taxes and amortization costs (EBITA) near-doubled from €78 million a year ago to €153 million in the latest quarter.

In its financial presentation, Philips remarked on its strong momentum in Europe, noting: “In Germany, LED lamp revenues have grown 240%, making us the market leader.”

Overall headcount at Philips has now been cut by some 5640 positions, out of a planned rationalization that is expected to result in 6700 job cuts in total.

Sales by the company's Lumileds subsidiary accounted for 4% of the Philip’s lighting division’s revenues over the past year – equivalent to €336 million - with the parent firm saying that its chip manufacturing operation is set to return to profitability in 2013.

Philips is also maintaining its forecast that by 2015 LEDs will account for some 45% of its lighting sales, within a lighting market by then expected to be worth between €75 billion and €80 billion (excluding automotive lighting).

Van Houten said that he was pleased with the latest quarterly performance, given what he described as a continually “challenging” economic environment, and predicted that the price of consumer LED lamps (i.e. replacement bulbs) should drop below €10 next year – bringing with it the expectation of a strong acceleration in sales of the products.

Philips' CEO on the company's latest financial quarter: