AMSTERDAM, Netherlands (AP) — Royal Philips Electronics, one of Europe's largest medical equipment and electronics manufacturers, said Monday it will more than double profits by 2010 as it streamlines the company.
Chief Executive Gerard Kleisterlee said the company is also pursuing acquisitions in health care, lighting and consumer lifestyles, with a focus on emerging markets, namely Asia.
''We are always in talks,'' he said. ''The timing of acquisitions is always unpredictable.''
Philips is paring down all of its business units into three consolidated sectors, which will save an estimated 150 million euros to 200 million euros ($205 million to $274 million) by 2010, Kleisterlee told reporters. A plan for further cost reductions will be finalized this year, he said.
New efficiencies will be created through tightened management, combined warehouses and improved logistics, not job cuts, the company said.
By 2010, Philips expects earnings before interest, taxes and amortization margin of its current businesses to exceed 10 percent from its current level of 7.5 percent.
''Philips expects EBITA per common share to more than double by 2010 from the level expected in 2007,'' the company said.
It also said it aims to deliver a minimum of 6 percent comparable annual average sales growth for the two-year period through 2010.
Royal Philips Electronics NV shares gained 3.9 percent to 29.48 euros ($40.60) in Amsterdam.
Philips, which makes high-end medical equipment, energy-saving light bulbs and household appliances like shavers and televisions, sold its semiconductor division last year. The company has been exiting markets where it doesn't hold a first or second-place position, notably divesting its mobile phones operations after it was eclipsed by Nokia Corp.
The restructuring was the latest step in a reorganization that began in 2001, when Philips first started outsourcing manufacturing units and shedding businesses over which it lacked full management control.
In the last two years Philips has spent $6.4 billion on acquisitions in increasingly focused core areas, Kleisterlee said.
Expansion will focus on high-growth areas, such as the health and well-being industries as populations age, and in strong geographic areas, especially China, India and Latin America.
Uncertain financial markets are a boon to companies like Philips, which is seeking to make new acquisitions and has money to spend, Kleisterlee said.