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Philips breaks up company, creates new business

CNBC with Reuters
Holding structure 'no longer necessary': Philips CEO
Holding structure 'no longer necessary': Philips CEO

The CEO of Philips, Frans van Houten, told CNBC on Tuesday that splitting the company into two separate divisions would create significant opportunities for growth.

His comments come after the 120-year-old company revealed plans to create a stand-alone lighting business and merge its consumer and health-care divisions into a 15-billion euro ($19.28 billion) business.

"We think that both have great growth opportunities," van Houten said in a television interview, and highlighted that both the health tech and lighting solutions markets were sizeable.

He added that a separate listing for the lighting business was "very well possible, but it's news we need to talk about a year from now".

Read MorePhilips stock hit hard as it warns on challenging 2014

Koen van Weel | AFP | Getty Images

The company said in a statement the new structure will bring cost savings of 100 million euros next year and a further 200 million euros in 2016.

Philips expects to incur a charge of around 50 million euros for restructuring from 2014 to 2016.

'Tough world'

"Geopolitically it's a tough world out there," van Houten added. He cited a slow-down in China, economic sanctions against Russia, ongoing turmoil in the Middle East and the outbreak of Ebola in Africa as the main drivers of this.

However he added: "Europe is looking up a little bit... Especially southern Europe, where I see the economy strengthening a little bit."