Philips has decided to split. The historic Dutch electronics company has announced its intention to split into two separate companies, one for the activities of lighting and the other for health and lifestyle, which will be called HealthTech. Both will keep the group name. The Lighting division will be spun off and will be open to external capital.
"I recognize the importance of the decision we are making - commented Frans van Houten, executive director of Philips -, but it is time to start the next strategic step for the company". Following the news, the title of the company soars more than three percentage points on the Amsterdam Stock Exchange.
Philips expects from the spin off savings of 100 million euros in 2015 and two hundred million in 2016. The restructuring costs should amount to around 50 million from 2014 to 2016. The group had already launched some important restructuring measures earlier: just last spring the group had definitively exited the TV market.
Philips, in relation to the strategic repositioning of the company, has announced that it is considering various options on the control structures of the two companies in order to be able to enter the capital market independently. The company specifies that more information will be disclosed next year.
The group, which estimates it will have to spend a further 50 million euros to finance the restructuring in the three-year period 2014-16, expects that the two structures into which the company will be divided will be world leaders in their respective sectors: the health and lifestyle branch, which in 2013 it recorded a turnover of 15 billion euros, and the lighting branch, with a turnover of 7 billion.
Philips, which for the second half of the current year estimates an Ebitda "slightly" lower than last year, for 2016 has set itself an Ebitda margin of 11-12%, a Roic above 14% and an increase of sales in the 4-6% range.
