Philips raises targets, 1.5 billion euro share buyback
AMSTERDAM (Reuters) - Philips (PHG.AS), the Dutch healthcare, lighting and consumer appliances group, raised most of its financial targets on Tuesday after two years of job cuts, divestments, and a focus on core activities turned around performance.
Philips said it would spend another 1.5 billion euros ($2 billion) on buying back its shares over the next two to three years and set sales and profit margin targets for 2014 to 2016.
"We see substantial opportunities for profitable growth for 2016 and beyond," Chief Executive Frans van Houten said in a statement, adding that the group's businesses have significant unlocked potential.
The targets included comparable sales growth, on a compound annual growth rate basis, of between 4-6 percent, and earnings before interest, tax and amortization (EBITA) margins of 11-12 percent for the group.
Philips also set EBITA margins of 9-11 percent for the lighting division, 16-17 percent for the healthcare business, and 11-13 percent for the consumer division.
Philips has been selling off much of its consumer electronics business over the past 18 months - divesting its television, audio and video operations as it struggled to compete with lower-cost Asian manufacturers, to focus on more profitable home appliances, lighting and healthcare.
It now derives more than 40 percent of its sales and 70 percent of its EBITA from healthcare. It is ranked the leading medical equipment supplier in the United States and a top-three producer of hospital equipment worldwide.
($1 = 0.7489 euros)
(Reporting by Sara Webb; Editing by Anthony Deutsch)
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