Philips CEO: LED Transformation to Make Lighting Less Profitable in the Short Term

In Lighting after a declining trend over the past several quarters, we have delivered a sequential improvement in performance, as changes to the organizational structure and operational improvements start making an impact. The steep decline in profitability over the past several quarters in lighting has led some people to jump to the conclusion that the deterioration in performance is due to the transformation to LED. I would like to clarify our view on the Lighting business.


The LED transformation is expected to make Lighting less profitable in the short term and we have recognized this by lowering our midterm EBITA objective from the 12% to 14% range to 8% to 10%. This is due to higher investments in R&D and selling expenses, as well as competitor pricing pressure, especially in relation to LED components and bulbs from new entrants in the high-volume electronic space.

The LED transformation is expected to make Lighting less profitable in the short term and we have recognized this by lowering our midterm EBITA objective from the 12% to 14% range to 8% to 10%. This is due to higher investments in R&D and selling expenses, as well as competitor pricing pressure, especially in relation to LED components and bulbs from new entrants in the high-volume electronic space.  Read more.