Philips seals China TV deal as profit slips

PHILIPS is offloading part of its TV arm in the first step by new chief executive Frans van Houten to boost flagging profit at Europe’s biggest consumer electronics maker.

Philips is moving its loss-making TV business into a joint venture with Hong-Kong based monitor maker TPV and has the option to sell out.

The deal means that the Chinese company now owns 70 per cent of the TV arm.

The Dutch group, which did not disclose financial details of the deal, has struggled to compete with lower-cost Asian rivals Samsung and LG Electronics after once being one of the market leaders.

Van Houten, a restructuring expert who took over as chief executive this month, said he is assessing the profitability of Philips’ 400 or so business areas and “taking the blanket off” its laggards, a hint that further divestments could be on the cards.

“We are not yet firing on all cylinders...There’s much unlocked potential in Philips,” Van Houten said.

Philips did not give a value for the deal, saying it would receive a deferred payment from TVP.

All 3,600 employees at the TV business will transfer to the Hong Kong company.

TPV, which controls about 33 per cent of the global computer monitor market, posted a near 20 per cent rise in 2010 profit.

Van Houten said that Philips, which competes with Germany’s Siemens and General
Electric in the healthcare and lighting business is not planning to switch away from
consumer goods.

Siemens has been concentrating more on industrial customers.

Philips indicated that it was looking for a new path for its TV business in September last year, as part of a shake-up of the business.