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Philips Stock Dips On Weak Q4 Profit, Mulls Options For Domestic Appliances Unit


Shares of Philips Electronics NV (PHGFF.PK,PHG) were losing around 3 percent in the morning trading in Amsterdam after the Dutch consumer electronics giant reported weak profit in its fourth quarter, despite higher sales.

Looking ahead to fiscal 2020, the company aims 4 to 6 percent comparable sales growth, compared to 4 percent growth in the previous year. Further, the company projects adjusted EBITA margin improvement of around 100 basis points from last year's 13.2 percent of sales.

Separately, the company said it will review options for the Domestic Appliances business, for which it will create a separate legal structure within the firm. The work is expected to be completed in 12 to 18 months.

Philips' Domestic Appliances business generated 2.3 billion euros sales in 2019 in kitchen appliances, coffee, garment care and home care appliances.

CEO Frans van Houten said, "The Domestic Appliances business has significantly contributed to Philips, but it is not a strategic fit for our future as a health technology leader, as we choose to further sharpen our focus along the health continuum and invest in our consumer health and professional healthcare-related businesses."

Further, the company announced the appointment of Roy Jakobs as the new Chief Business Leader of the Connected Care businesses with immediate effect. He succeeds Carla Kriwet, who will leave the company.

Jakobs is currently Chief Business Leader of the Personal Health businesses, and the company will soon announce a successor for the post. Till then, the CEO will lead the Personal Health businesses on an interim basis.

For the fourth quarter, Philips' net income attributable to shareholders declined to 556 million euros or 0.62 euros per share from last year's 673 million euros or 0.72 euros per share.

Income from continuing operations was 550 million euros, down from 723 million euros last year.

Adjusted earnings per share from continuing operations were 0.83 euro, compared to last year's 0.76 euro. Adjusted EBITA margin improved 50 basis points to 17.9 percent of sales from 17.4 percent a year ago.

Philips' sales for the fourth quarter were 5.96 billion euros, up 7 percent from 5.59 billion euros in the prior year. The company recorded 3 percent comparable sales growth. Comparable order intake increased 3 percent

In Amsterdam, Philips' shares were trading at 43.10 euros, down 2.71 percent.

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