CEO Frans van Houten is cutting off another limb from the Philips body. After the television and lighting business, this time Domestic Appliances is on the chopping board. The division is no longer “a strategic fit for our future as a health technology leader, as we choose to further sharpen our focus along the health continuum,” explained Van Houten in a written statement.
Domestic Appliances has annual sales of about 2.3 billion euros from kitchen appliances, coffee makers and vacuum cleaners. Products such as electric toothbrushes and shavers will not be included in the divestment, as they’re part of the Personal Health branch.
Philips hasn’t yet decided in which way Domestic Appliances is to be seen off. Previously, Van Houten sold the TV activities to the Chinese company TP Vision, while Lighting was spun out as a public company (now called Signify). Philips sold its last portion of shares last year.
The divestment announcement was made alongside the publication of the fourth-quarter and full-year financial results. On a comparable basis, annual sales increased 4 percent to 19.5 billion euros, which is only just in range of Philips’ ambition to grow them 4-6 percent per year. The profit margin increased 0.1 percent, well short of the 1 percent ambition.
Philips partly blames geopolitical headwinds, ie the US-Chinese trade dispute, for underperforming. Connected Care has also been a bit of a problem child over the past year. Philips has announced that Carla Kriwet, chief business leader of Connected Care, is leaving the company. She’s succeeded by Roy Jakobs, who led the Personal Health business. Van Houten will head up Personal Health until a replacement is found.