Philips chief emerges from ‘perfect storm’

The president of Philips Lighting in the Middle East and Turkey, Paolo Cervini, says the company is only now emerging from the political and market upheavals of recent months to embrace fresh opportunities in the fields of low-energy technologies and smart lighting.

‘My management team and I called 2015 the perfect storm,’ says Cervini, an Italian who moved to Dubai in 2009. ‘You had an absence of government in Turkey, then the imposition of duties, you had the war in Yemen, the collapse of the oil price, and [the situation in] Iran was moving very slowly, and everything was happening at the same time.

‘We are just forming an industry within a market situation which doesn’t allows us to move fast.’

The biggest factor affecting investment, however, is the oil price. It’s down from over 100 dollars a barrel to 29 dollars and is causing headaches for investors across the Gulf states. ‘For instance, in Saudi Arabia, over 80 per cent of public revenue is oil related,’ says Cervini. ‘So we have clients who can’t even pay the salaries of their employees today. And they’re big names.

‘You also have a situation where governmental bodies and municipalities don’t have liquidity and are not able to pay contactors, so the entire value chain in stuck. Projects are not just going on hold; they’re getting cancelled altogether.

‘On the other side of the coin, if I look at the region there’s definitely opportunities. In the UAE for example, there’s opportunities for LEDs. There, the energy issue is going up the agenda. In the Middle East, lighting accounts for 22 per cent of energy use compared to a global figure of 19 per cent, so the opportunity is huge.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

‘For public and private companies there’s also a big opportunity. They’re keen to be moving but the sticking point is the initial capital cost. So we are having more conversations about financing, and we are starting to see performance contract management [in the region] which is absolutely a new trend and a new service.

‘We feel empowered as we at Philips have experience here and we can guarantee the performance. Customers feel much better too, as they are getting exactly what they want.’

Globally, LED-based lamps and fixtures account for almost 50 per cent of Philips Lighting revenues, but in the Middle East it’s around 35 per cent, a figure Cervini is keen to improve.

‘In the Middle East it’s all about the growth [in LEDs],’ says Cervini. ‘We will grow this figure rapidly and I think we can get to half our sales coming from LEDs in the next year. For instance, all the street lighting projects we are doing at the moment are LED.’

Other factors are playing a part. ‘For instance, urbanisation is a mega trend as much in the Middle East as anywhere else. That’s driving up energy use in cities so it’s important that they find a way to manage and reduce it.’

He believes the region will be receptive to Philips connected lighting technologies, especially in the creation of so-called ‘smart cities’.

‘Controls are the next disruptive technology and it’s in addition to LEDs that controls will make a big difference. For outdoor our CityTouch technology is one of the apps that can make a city smart. With this, you can control a whole city’s lights from an app. You have total control for maintenance services, so you can intervene only where necessary.’

There are more than 260 installations of CityTouch around the world in 31 countries, including Los Angeles, where over 140,000 light points are monitoring and controlled to cut energy.

‘It’s the same for indoor,’ Cervini points out. ‘In the Deloitte building in Amsterdam, the whole building is controlled by a [Power over Internet] network, which gives the building owner lots of data. For instance, it tells you about the useage of the building so you can make the most efficient use of space.’

He’s also enthusiastic about exemplar smart lighting schemes that Philips has unveiled in recent years and believes they will find a receptive audience in the Middle East. For instance, the indoor positioning technology used in the high-profile project at a Carrefour supermarket in Lille, France will soon be replicated with a retailer in the UAE.

His division also has a major Power over Internet project, again in the UAE, which will be unveiled later this year.

As well as his responsibilities at Philips, Cervini is currently president of the Middle East Lighting Assocation, which is working hard to improve the quality of lighting products that get installed in the region and address the spec-breaking that’s been rampant in the region.

However, in the six years that Cervini’s been in the Middle East, he has started to see attitudes change.

‘There’s a definite shift in that the lighting spec is now more respected. The quality of what is being installed is improving a lot. Not just the contractors but the end users too are becoming more appreciative of quality in lighting. And that’s helping key brands such as us at Philips.’

He believes incidents such as the high-profile fires in recent years have helped to concentrate minds. ‘For sure they have put more attention on lighting. Governments are giving more attention to standards across the region. For us in Mela, the priority is getting those standards right.’

As part of that educational remit, Cervini says he ‘absolutely’ welcomes next April’s LuxLive Middle East 2016 exhibition and conference in Abu Dhabi as a way of driving up awareness.

Says Cervini: ‘It’s all about awareness and education’.

 

  • LuxLive Middle East 2016 takes place on Wednesday 13 April and Thursday 14 April at the Abu Dhabi National Exhibition Centre. See the full programme and register for your free place HERE.