Philips Mulls Options for Domestic-Appliances Unit -- Update
January 28 2020 - 3:22AM
Dow Jones News
--Philips is reviewing the future of its domestic-appliances
business as it focuses on health technology
--The Dutch company said it will assess interest from buyers
after preparing a separation plan
--Philips also reported a fall in fourth-quarter net profit for
2019
By Adria Calatayud
Koninklijke Philips NV (PHIA.AE) said Tuesday that it will
launch a review of options for its domestic-appliances business, as
the Dutch company doubles down on its shift toward health
technology.
Philips said it will start the process of creating a separate
legal structure as it evaluates options for its domestic-appliances
business, which generated sales of 2.3 billion euros ($2.54
billion) last year in kitchen appliances, coffee, garment care and
home care appliances. The process is expected to be completed in 12
to 18 months, it said.
"The domestic appliances business has significantly contributed
to Philips, but it is not a strategic fit for our future as a
health technology leader," Chief Executive Frans van Houten
said.
The company will judge the interest from potential acquirers for
a sale of the business after designing a separation plan, Mr. Van
Houten said. It is too early to estimate the cost of the process,
he said.
"At this time we keep all the options open," Mr. Van Houten said
in a call with journalists.
Philips will look for acquisitions to strengthen its
health-technology portfolio as it sharpens its focus on the sector,
but a deal isn't imminent, Mr. Van Houten said.
The review follows Philips' split of its operations into two
separate entities, health technology and lighting. The move was
outlined in 2014 and culminated in 2016 with the listing of
Philips's unit as Signify NV (LIGHT.AE).
Mr. Van Houten said Philips expects to provide a brand license
to the new company in a similar way to Signify.
Philips disclosed its plans for its domestic-appliances business
as it reported a 17% fall in net profit for the fourth quarter of
2019.
Net profit for the quarter to Dec. 31 was EUR556 million
compared with EUR673 million in the year-earlier period, the Dutch
technology company. Analysts expected a net profit of EUR602
million, according to a consensus forecast provided by the
company.
Sales for the quarter were up at EUR5.96 billion compared with
EUR5.59 billion a year earlier, with a 3% rise in comparable sales,
Philips said. Analysts expected quarterly sales of EUR6.03 billion,
according to a company-provided consensus.
Adjusted earnings before interest, taxes and amortization margin
rose by 50 basis points to 17.9%, the company said.
For 2020, Philips said it targets 4%-6% comparable sales growth
and an adjusted Ebita margin improvement of around 100 basis
points, with a performance momentum that is expected to improve in
the course of the year.
Write to Adria Calatayud at adria.calatayud@dowjones.com
(END) Dow Jones Newswires
January 28, 2020 03:07 ET (08:07 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Koninklijke Philips NV (EU:PHIA)
Historical Stock Chart
From Aug 2024 to Sep 2024
Koninklijke Philips NV (EU:PHIA)
Historical Stock Chart
From Sep 2023 to Sep 2024