Philips Q4 loss contracts; sheds entertainment arm

Jan 30 2013, 03:30 IST
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SummaryRoyal Philips Electronics Tuesday said it will sell the entertainment division which contains many of the consumer products for which it is best known, such as audio and video equipment, to Funai Electric of Japan for 150 million euros plus licensing fees.

Royal Philips Electronics Tuesday said it will sell the entertainment division which contains many of the consumer products for which it is best known, such as audio and video equipment, to Funai Electric of Japan for 150 million euros ($202 million) plus licensing fees.

Funai will assume responsibility for the manufacturing of the Philips products but license and sell them under the Philips brand for five years. It has an option to renew. The disposal is the latest in a series of moves by Philips as it gradually shifts its corporate focus away from consumer electronics manufacturing — while continuing to draw some benefit from the historical strength of its brand.

In addition to the Funai deal, Philips also reported fourth-quarter earnings Tuesday that were hammered by a 509-million-euro cartel-forming fine — the largest ever levied by European regulators. Philips said its underlying business improved on an operational basis, with its lighting arm, which accounts for a quarter of the company's total business, seeing sales rise 43%. Excluding restructuring charges and the fine, earnings were up 50% to 875 million euros, the company said.

“Our operational results improved across all sectors, as a result of increased sales, overhead cost reductions, and gross margin expansion,” said chief executive Frans van Houten.

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