Philips to quit AV buinsess

Marking its exit from the AV venture and focus more over the healthcare and home appliances units, Philips Electronics has decided to sell its audio and video business to Japan's Funai Electric.

Its TV production business was ailing for a long time with the collaboration with Hong Kong based TPV failing to assure its revival. Now the sale of its audio and video operations for $202 million plus licence fees to Funai takes the rest of electronics out of the Philips name, except for a remote-control business. The deal for audio, multimedia and accessories will be closed by 2013-end, while the video business will be transferred in 2017.

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.

Talking about exiting audio and video business, Philips Electronics chief executive Frans van Houten, "This completes the repositioning away from consumer electronics." The consumer division will now 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.

Philips is the world's biggest lighting maker and among the top three in hospital equipment.

Its shares rose 2% 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.

Philips reported 2012 net profits of 231 million euros ($311 million), after losses of 1.29 billion euros in 2011. Company profits were nevertheless hit by a loss of 355 million euros in the fourth quarter because of a one-off 509-million euro European Commission fine for cathode ray price fixing, Philips said.