Since Philips announced their split in late 2014 their lighting division's annual sales have fallen by 3% to a mere $6.9 billion for the last year. CEO Frans van Houten has commented to investors that the North American division's performance was 'unsatisfactory' and because of this he has appointed Amy Huntington as the new head of North America's lighting business. He also commented that China's sales had also dropped due to deteriorating market conditions. This is different to the wider divisions performance which has continued to grow rapidly due to selling of LED-based solid-state lighting products in addition to a contract to replace the entire street lighting system of Madrid.
Philips is also planning to sell the automotive lighting unit in addition to Lumileds, the LED chip making branch. Lumileds commented that, 'The company is in discussion with external investors for the combined Lumileds and automotive lighting businesses and expects to complete translation in the first half of 2015.'
These two divisions composed of 8300 employees have delivered sales of $1.4 billion.
Philips has estimated that the market for high-power LEDs will grow at an annual growth rate of 17-21% up to 2018, whilst the growth of the the overall lighting market is estimated to be 3-5%. The lighting industry is rapidly transforming from inefficient products to highly efficient goods and now demands extreme innovation.
The CEO has claimed that Philips is outlaying over 30% more than its closest competitor in research and development to set a higher pace of technological advancement. Van Houten expects that the emerging market of data-enabled lighting systems will expand the overall market by roughly $1 billion in the next few years.
Whilst all this is going on, Philips have undertaken a monumental project to replace street lighting in Spain, Van Houten commented that, 'We signed a contract to provide the city of Madrid with what is the world's largest street lighting upgrade to date, involving the replacement of 225,000 luminaries.' He also commented that the new system would create a saving of 40% in energy which would mean the installation cost would be paid back almost instantly and mean no extra cost to Madrid's citizens.
The new system is said to feature an 'integrated command centre' which means that the entirety of the street lighting system could be controlled by a single control point.
Another project that is set for the future will see the distribution of 1.5 million Philips LED lamps in India to over a million households. This should cut lighting energy consumption by 80% and would save 80 MW in electricity generation.
With these projects Philips lighting is looking to have a prosperous year ahead but 2015 will present challenges due to the $400 million in costs due to the split and reconstruction of the company.