Amsterdam-based health tech firm Philips has announced that it is looking to sell its domestic appliances business which it says no longer fits with the company's focus on personal health products and hospital equipment.
Philips global headquarters, Amsterdam, the Netherlands Photo: Philips
Philips has consciously narrowed its focus towards med tech in recent years by shedding the businesses it had become best known for. In 2013 the company sold its consumer electronics business to Japan's Funai Electric. In 2016, Philips floated its lighting division in an initial public offering on the stock market in 2016. Two years later, Philips Lighting changed its name to Signify.
The announcement of the intention to sell off the domestic appliances unit, which makes vacuum cleaners, coffee machines and air purifiers and generated €2.3-billion in sales last year, is a continuation of this push towards the healthcare market. Philips expects the sale to take place in the next 12 to 18 months.
"This business is not a strategic fit for our future as a health technology leader," said CEO Frans van Houten.
"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.
Van Houten added that all options would remain open for the domestic appliances business, which he described as having a profit margin "slightly less" than Philips' average.
Marc Hesselink, an analyst at ING said that a "quick and dirty" calculation valued the domestic appliances arm at around €3-billion.
"This was a, in our view, widely expected move...to focus even more on health tech", he said.
The announcement came earlier this week as Philips reported its annual results for 2019. Annual income rose by 7% to €1.2-billion, with sales up 4% year-on-year of €19.5-billion largely due to rising Chinese demand.
With adjusted earnings before interest, tax and amortisation, the group's profit margin rose by only 10 points to 13.2%, largely as a consequence of the €70-million worth of tariffs from the US-China trade war.
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