Philips sets out goals, showcases innovations for healthcare, lighting

Speaking at the "Philips Innovation Experience 2014" event, which nearly 200 journalists from around the globe attended in Eindhoven - the city where Gerard and Anton Philips turned on their first incandescent bulbs and created the Dutch company 123 years ago - van Houten said Philips considered organisational change as "a way to boost investment and grow faster".

Philips declared on September 21 that it would spin off its lighting operations into a standalone company, possibly for an initial public offering in the future, and combine its healthcare and consumer-lifestyle divisions into a HealthTech company.

The separation will end Philips's more than 100-year-old conglomerate structure.

The CEO said the separation of the legal entities, which would take some 12-18 months to complete, may not be noticed by its customers or consumers at large.

"Our customers and consumers might not see much difference. Many people don't know [our former] TV [division] is already a separate company," he added.

The Dutch giant sold it television business in 2012, after spinning off its semiconductor division - now known as NXP Semiconductors - in 2006.

Van Houten said Philips must keep reinventing itself to stay relevant in its markets, including moving away from categories that are no longer growing, or in which it has no chance to differentiate.

"But the spilt we announced today is different to the TV-business separation that we did earlier. Both offer exciting opportunities, but the two areas have nothing much in common," he said.

Affirming the "A" rating given to Philips, Fitch Ratings said in a report issued shortly after the company's announcement that it considered Philips's loss of synergy from the dual separation of its HealthTech and lighting businesses to be limited, given the unrelated technologies utilised by the two businesses.

"HealthTech will not benefit from the same multi-sector diversification as the existing Philips group, which is exposed to the healthcare, consumer and lighting markets. However, the loss of diversification is, to a large extent, mitigated by HealthTech's scale of operations, leading positions and improved earnings profile," said the international rating agency.

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Philips sets out goals, showcases innovations for healthcare, lighting