Philips spinning off healthcare unit; posb. job losses imminent

Photo: Phillips Headquarters, Amsterdam
Photo: Phillips Headquarters, Amsterdam. (Photo: Phillips Headquarters, Amsterdam)

Dutch electronics giant Philips announced  they will be streamlining the 120-year-old company, separating its healthcare-lifestyle sector from its historic lighting division, the company said Tuesday. While both companies will continue to use the Philips brand name, the move will incur annual restructuring costs of around 50 million euros and bring potential job losses.

The new structure is predicted to result in savings of 100 million euros in 2015 and another 200 million in 2016.

"We're preparing Philips for the next century," CEO Frans van Houten said in a press conference. "Giving independence to our lighting solutions business will better enable it to expand its global leadership position and venture into adjacent market opportunities.”

Van Houten told reporters that it was too early to say how many job losses might be involved. Restructuring programs in the 1980s and 1990s led to thousands of job losses as Philips exited from several businesses including, chip-making and TV manufacturing. The company currently employs around 133,000 people around the globe.

The split comes after German technology company Siemens highlighted the effects of heavy competition from Samsung and LG as the market shifts towards low-energy bulbs, suffering a net loss of 378 million euros in 2012. In July, Siemens separated the activities of its lighting company Osram, and cutting 7,800 jobs worldwide.

Philips shares were up 3.26 per cent to 24.27 euros (USD 31.23) immediately following the announcement.