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Philips to sell off domestic appliances business
DUTCH health technology company Philips is looking to sell its domestic appliances division, whose coffee machines, air purifiers and air fryers no longer fit with the company's range of hospital equipment and personal health products.
Amsterdam-based Philips said it would carve out the business, which generated 2.3 billion euros (S$3.4 billion) in sales last year, in the coming 12 to 18 months, while it reviewed its future options.
Once a sprawling conglomerate, Philips has transformed itself into a specialised health technology company in recent years, spinning off the lighting and consumer electronics divisions for which it was previously best known.
"This business is not a strategic fit for our future as a health technology leader," chief executive officer Frans van Houten said.
He said all options are still open for the division, which he said had a double-digit profit margin which was "slightly less than the average for Philips".
"We are committed to finding a good home for this business, as we expand and invest in our consumer health and professional healthcare related businesses," he added.
Philips also reported its 2019 earnings, which showed its profit margin inched up only from 13.1 to 13.2 per cent last year, missing its initial goal of a 100 basis points improvement.
Philips in October already said it would miss its target, as the trade war between the United States and China forced it to shift production and to seek other suppliers for components.
This mainly hurt Philips' already struggling connected care business, which specialises in remote patient monitoring, whose margin slipped significantly last year.
Those weak results meant the end of the division's leader Carla Kriwet's career at Philips. She will leave the company and will be replaced by Philips veteran Roy Jakobs.
"These are great businesses, but underperforming," Mr Van Houten said on Tuesday.
Philips' core earnings increased 10 per cent to 1.066 billion euros in the fourth quarter, while comparable sales rose 3 per cent to 6 billion euros.
Analysts polled by the company on average had expected adjusted earnings before interest, taxes and amortisation (Ebita) of 1.07 billion euros, on sales of 6.03 billion euros.
Philips reaffirmed its 2020 targets for a 100 basis point improvement in the adjusted Ebita margin and a 4 to 6 per cent increase in comparable sales. REUTERS