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Philips To Get Out Of Appliance Business, Sale Sign Goes Up

They sold off their TV Business now Philips is looking for a buyer for their appliance business.

The big European brand plans to sell its domestic appliances arm or spin it off into a separately listed company as they move to concentrate on the high profit margin health business.

This is not the first time that Philips has sold a core piece of business, they sold their TV business to TP Vision who recently hired a sales manager in Australia, they also sold their lighting and control business.

The appliance division which includes coffee machines, vacuum cleaners and air purifiers is expected to be sold by, mid-2021.

The Company sold its audio and video business in 2013 for Euro 150m to Japan’s Funai Electric and four years later Philips Lighting was hived off in an IPO that valued the company at 3bn Euro.

Chief executive Frans van Houten said the domestic appliances unit was no longer a “strategic fit” for the company and a disposal would free up resources for its healthcare business.

The group announced its disposal plans as it reported annual results on Tuesday.

Net income rose 7 per cent to €1.2bn in 2019. Scott Bardo, senior healthcare analyst at Berenberg, said increasing orders for products including protective masks and radiology equipment could lift Philips’ orders in 2020. He added that the group’s annual results were “fundamentally good enough”.

Philips reported group sales of €19.5bn, up 4 per cent year-on-year because of strong demand from China.

The group’s profit margin, measured as adjusted earnings before interest, tax and amortisation, rose only 10 basis points to 13.2 per cent, largely due to €70m worth of tariffs as a consequence of the US-China trade war, according to Mr van Houten.

The Dutch conglomerate had warned in October that profit margins would not hit the longstanding 100bp target that it has reached in each of the past three years.

“I am happy now that there is a truce between China and the US so further deterioration has been staved off,” said Mr van Houten, but added that rising tensions between the US and Europe were a concern for the year ahead.

Shares in Philips fell 2.2 per cent.

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