Lights out: Philips to split company in two
The CEO of Philips (Euronext Amsterdam: PHIA-NL), Frans van Houten, told CNBC on Tuesday that splitting the company into two separate divisions would create significant opportunities for growth.
His comments come after the 120-year-old company revealed plans to create a stand-alone lighting business and merge its consumer and health-care divisions into a 15-billion euro ($19.28 billion) business.
"We think that both have great growth opportunities," van Houten said in a television interview, and highlighted that both the health tech and lighting solutions markets were sizeable.
He added that a separate listing for the lighting business was "very well possible, but it's news we need to talk about a year from now".
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The company said in a statement the new structure will bring cost savings of 100 million euros next year and a further 200 million euros in 2016.
Philips expects to incur a charge of around 50 million euros for restructuring from 2014 to 2016.
'Tough world'
"Geopolitically it's a tough world out there," van Houten added. He cited a slow-down in China, economic sanctions against Russia, ongoing turmoil in the Middle East and the outbreak of Ebola in Africa as the main drivers of this.
However he added: "Europe is looking up a little bit... Especially southern Europe, where I see the economy strengthening a little bit."
