* Q4 net loss of 355 mln euro vs 160 mln loss a year ago
* Q4 adjusted EBITA of 875 mln euros, up 50 pct
* Reiterates on track to achieve 2013 targets
* Shares highest since CEO took post in April 2011
By Sara Webb
AMSTERDAM, Jan 29 Philips Electronics
is selling its audio and video business to Japan's Funai
Electric Co in a deal that almost completes its exit
from consumer electronics to focus on more profitable home
appliances and healthcare areas.
For many years, the Dutch company was a familiar household
name in Europe thanks to its high-quality goods such as
television sets, cassettes and CD players.
But it has struggled to compete with lower-cost Asian
manufacturers, including Samsung Electronics and LG
Electronics, and has had to cut costs and sell
assets over the last two years.
Philips had already hived off its ailing television business
by setting up a joint venture with Hong Kong-based TPV
Now the sale of its audio and video operations for 150
million euros ($202 million) plus licence fees to Funai Electric
takes the rest of the electronics out of the Philips name, apart
from a small remote-control business.
With more consumers going online for music, films and games
rather than buying CDs and DVDs, Philips decided to get out of
home entertainment even though it was profitable last year,
Chief Executive Frans van Houten said on Tuesday, adding that
the business was shrinking and "margin dilutive".
"This completes the repositioning away from consumer
electronics," van Houten told Reuters Insider.
In future, the consumer division will focus on appliances
such as shavers and electric toothbrushes - two of the group's
most profitable products - as well as toasters, juicers and
coffee makers. It sold 10 million shavers in China alone last
year, van Houten said.
As well as making consumer goods, Philips is the world's
biggest lighting maker and a top-three maker of hospital
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Its shares rose 2 percent to 22.37 euros, the highest level
since April 2011 when van Houten became CEO with a brief to
revive the company hit weak economic growth, fragile consumer
spending and government budget cuts in several markets.
Van Houten said that of the hundreds of businesses and
markets that have been under scrutiny since he took over,
roughly one third still need to perform better, while two-thirds
are doing well.
Fourth-quarter results released earlier on Tuesday showed
that underlying profit improved significantly after job cuts,
disposals and a focus on core businesses.
Philips reported three consecutive quarters of
better-than-expected net profit in 2012, suggesting it had at
last turned the corner.
According to equity analysis firm StarMine, Philips trades
at a forward 12-month price/earnings ratio of 14.4, compared
with 12.5 for Siemens and 13.4 for General Electric
But on a price-to-book ratio, it is slightly cheaper than
its rivals, at 1.7, against 2.1 for Siemens and 1.8 for GE.
Analysts welcomed the Funai Electric deal as "an important
divestment" that could fan hopes of further disposals in the
Van Houten dismissed talk of any major acquisitions, saying
the firm was only interested in bolt-on deals at the moment.
Philips reported a fourth-quarter net loss of 355 million
euros - widening from a year-ago loss of 160 million euros - as
it cited previously flagged provisions and charges.
The group had already warned last month that it would take a
provision of 509 million euros to cover a European Union fine
for cartel practices in its television business, and that
restructuring charges would be higher than previously estimated.
Adjusted quarterly earnings before interest, tax and
amortisation (EBITA) was 875 million euros - up almost 50
percent from a year ago and the best quarter in the past two
years. Sales rose 3 percent to 7.161 billion euros.
Analysts in a Reuters poll had forecast adjusted EBITA of
847 million euros, a net loss of 308 million euros and sales of
7.161 billion euros.
Sales and profits rose at the healthcare division, which
sells home oxygen kits, hospital scanners and ultrasound
systems, and at the consumer business.
Excluding restructuring and acquisition charges, EBITA for
the lighting business - which has been hit by a slowdown in the
construction market - also rose from a year ago.
Philips said it was on track to achieve its end-2013 targets
of sales growth of between 4 and 6 percent, a margin on EBITA of
10 to 12 percent and a return on invested capital of 12 to 14