International. The Philips company announced the creation of two companies: HealthTech and Lighting solutions, thus dividing its two most important segments, health and lighting.
"I appreciate the magnitude of the decision we are making, but it is the right time to take the next strategic step for Philips, as we continue to transform. Giving independence to our lighting solutions business will allow you to expand your global leadership position and risk in adjacent market opportunities. Both companies will be able to make the necessary investments to drive the growth and profitability of the unit," said Frans van Houten, CEO of Royal Philips.
The lighting solutions business serves an estimated growth market of €60 million, it will be in a better position to take advantage of the fundamental changes taking place in the lighting industry, where value is shifting from individual products to systems and services.
As an independent company, the lighting solutions business will benefit from increased speed and agility in its operations to deliver innovation and access to capital markets to drive growth in connected LED lighting systems and services, more than offsetting the decline in conventional lighting.
The creation of the Lighting Company Solutions follows the recently announced plan to combine Philips LED Lumileds (Components) and Automotive Lighting Companies into an independent lighting components company.
In connection with the strategic repositioning of the company, Philips will initiate the process for the transition of its lighting solutions business into its own legal structure and consider several options for alternative ownership structures with direct access to the capital markets. More information about the initiative will be extended throughout 2015.
Each company will have a dedicated, focused and lean management structure, as a result of the planned integration of the layers of the relevant sectors and groups. The new operating structure enables additional cost savings through functions that allow it to result in additional EUR 100 million savings in 2015 and a further €200 million in 2016 Philips expects to incur approx. €50 million in additional annual restructuring costs in the period from 2014 to 2016.
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