PHILIPS said yesterday it would break its 120-year-old company in two, creating a standalone lighting business and merge consumer and healthcare divisions into a €15 billion (RM62.7 billion) business.
The company said the new structure would bring cost-savings of €100 million next year and a further €200 million in 2016. It expects restructuring charges of €50 million from this year to 2016.
“I do appreciate the magnitude of the decision we are taking, but the time is right to take the next strategic step for Philips,” said chief executive Frans van Houten.
The light bulb manufacturer established by Frits Philips expanded into a multinational electronics company that invented the compact disc. It has shifted to focus on healthcare and advanced lighting products.
Philips said the latest move would create two market-leading companies, Health-Tech and Lighting, with both companies using the Philips brand.
Philips said it would move the €7 billion lighting solutions business into a separate legal structure and consider various options for “alternative ownership structures with direct access to capital markets”.
In a revised outlook, Philips said adjusted earnings before interest, taxes, depreciation, and amortisation in the second half of this year were expected to be slightly below a year earlier.
In the healthcare business, core profit in the second half of this year is now expected to be lower than the reported core profit in the second half of last year. Reuters