--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)

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