As quarterly business reports come out, bright spots are showing up on the balance sheets of companies involved in LED lighting.
Philips, parent company of this site's sponsor, Lumileds, is a conspicuous example. While expressing concern about the global economic outlook, Philips reported sales up 3 percent from the year-ago quarter, and net profits more than tripled. Sales were especially strong in emerging markets -- China, Russia, and Latin America. Philips is involved in many market segments besides lighting, from household goods to healthcare (the latter division accounts for more than 40 percent of its sales and 70 percent of its earnings, or EBITA).
As best I can estimate from scattered reports, the lighting division was responsible for around 40 percent of total sales at Philips in the last 12 months. Lighting was up 1 percent overall in the quarter; LED revenues rose 28 percent and now amount to one-quarter of the division's sales. "The company said [LED] sales were still rising, but at a slowing speed, as the market moves towards a predicted ultimate ratio where LED bulbs are 45 per cent of the total," according to the Financial Times. Within the lighting division, Lumileds is growing at a "reasonable" pace and accounted for 4 percent of the sales, at €336 million (US$442.5 million) over the last 12 months, according to Optics.org.
By contrast, GE reported a 4 percent decline in lighting sales for the quarter -- the balance for each player is going to depend on where a company is in its transition to LED lighting and de-emphasis on the older technologies.
Speaking of that balance, we wrote last week about Osram Licht's spinning out from Siemens. While it is too early to report any financials following that separation, the markets appear to like Osram more than analysts expected at the time of the split. Initially offered at €24 (US$32), Osram has been trading lately around €29 (US$38).
Other data points
The UK LED lighting specialist Dialight reported even brighter results last week. The company said it will increase its dividend after a 70 percent rise in revenue in the first half, compared to the same period a year ago. Profit from lighting was up 180 percent.
Cree has not yet issued its quarterly report; expectations are running high. The company's stock has run up from the vicinity of $20 per share a year ago to around $69 now. The majority of analysts who follow the stock still maintain a "buy" rating on it. Wedbush has a target of $78 for Cree and Zacks recently upgraded the stock to an "outperform" rating.
This isn't a comprehensive survey of financial results from companies involved in the LED supply chain, but it does suggest a pattern: The future looks brighter the closer one gets to an LED lighting pure play.
— Keith Dawson , Editor-in-Chief, All LED Lighting