Royal Philips plans to rejig operations

Dutch consumer electronics major Royal Philips Electronics today announced the restructuring of its businesses for higher operating profitability.

The current business of the company will be broadly re-categorised into three segments, healthcare, lighting and consumer lifestyle.

All the three businesses will have separate CEOs. The consumer electronics, domestic appliances and personal care divisions would be integrated into a single "Consumer Lifestyles" segment.

Following global realignment, the restructuring plan for Indian operations would be finalised in a couple of months, company executives said.

The restructuring for all Philips operations would take effect from January 1, 2008. The organisational restructuring alone was expected to result in cost savings of €150-200 million, Kleisterlee said.

With the restructuring, Philips targets higher profitability across the world, with operating profit margins in excess of 10 per cent by 2010.

"We are well on track to achieve operating margins of more than 7.5 per cent following the successful implementation of the 2004-07 strategic plan," Gerard Kleisterlee, president and CEO, Royal Philips, said in a press statement.

The company also targets a global sales growth of six per cent every year for 2008-10.

In India, the company is focusing on high-end launches, including the Aurea range of televisions and Blue-ray disc systems in 2008. The price tag for a 42-inch Aurea television set would come to $6,895 (roughly Rs 2.8 lakh, excluding local taxes).

The company would also launch its entire range of consumer electronics in the country and expects to expand its electronics division in India by 25 per cent till 2008, according to a statement earlier this month by Rudy Provoost, CEO of consumer electronics.