Philips forecasts 'modest' sales growth in 2016

AMSTERDAM (Reuters) - Philips (PHG.AS) said on Tuesday that it is on track to spin off its lighting division next year, but the Dutch group expects only lacklustre sales growth in 2016.

Philips is in the process of separating its lighting division, the world's largest lighting company by sales, to prepare it for either an initial public offering or sale.

In a market update ahead of a meeting with analysts and investors in London, CEO Frans van Houten said "macroeconomic risks are increasing and as a result we expect modest sales growth in 2016."

He said the company's profit before interest, taxes and amortisation (EBITA) is improving, and the company will meet a 2016 EBITA margin target of 11 percent -- stripping out costs from separating the lighting division.

Shares rose 2.7 percent to 23.18 euros ($26.17) in early trading in Amsterdam.

The company said in July it expects costs of 400-600 million euros from separating and restructuring the lighting operations, spread evenly over 2015 and 2016.

Van Houten said Philips' operational improvement comes despite "deteriorating market conditions in certain emerging markets, most notably China."

He is expected to go into more detail on the separation of the lighting division during Tuesday's meeting.

(Reporting by Toby Sterling; Editing by Keith Weir)