Philips Lighting Quarterly Profit Jumps on Soaring LED Sales

Updated on
  • LED-based sales grew 25%; account for 53% total revenue
  • Adjusted Ebita margin widens to 9.3%; shares advance

Philips Lighting CEO: European Business Is Growing

Philips Lighting NV said second-quarter profit rose 16 percent as the world’s largest lighting manufacturer boosted sales of products based on more energy-efficient light-emitting diodes.

Adjusted earnings before interest, taxes and amortization increased to 161 million euros ($178 million), the company said in its debut earnings statement on Friday. Sales declined 6.2 percent to 1.73 billion euros, short of the 1.83 billion euros estimated by analysts surveyed by Bloomberg.

“We see the second quarter as a quarter of continued improvement,” Chief Executive Officer Eric Rondolat said in an interview with Bloomberg TV. “First at cash flow level, but also at operating margin level where we’re posting our seventh consecutive quarter of year-on-year improvement.”

The earnings are the first for Philips Lighting as a standalone company after it was spun out of Royal Philips NV, the parent company that’s shifting its focus to health care. The listing of shares came as consumers increasingly replace traditional bulbs with more energy-efficient and longer-lasting LEDs. During the transition, Philips Lighting is facing increasing competition from Asian producers of the technology as well as a drop in prices.

Philips Lighting shares rose 5.1 percent to 23.045 euros at 9:34 a.m. in Amsterdam, valuing the company at about 3.5 billion euros. The stock is up about 15 percent since the May 27 listing in Amsterdam. Royal Philips has retained a 71 percent stake in the company.

LED-based sales rose 25 percent in the latest quarter and now account for more than half of the company’s revenue, according to the statement. Lighting’s adjusted Ebita margin widened to 9.3 percent in the quarter from 7.5 percent the previous year.

The results “look good, especially the adjusted Ebita margin,” Nigel van Putten, an analyst for ING Bank, said by phone. “For the investment case it’s important that Lighting improves profitability, so this lends support.”