Philips to Pursue Growth in Emerging Markets as Europe Stagnates

Royal Philips Electronics NV is pushing growth in emerging markets such as China, Russia and Indonesia amid a European slowdown.

“We’ve made conscious choices to say: if Europe is stagnant then maybe we need to shift resources away from mature markets into these growth geographies,” Chief Executive Officer Frans van Houten said at a press meeting in Amsterdam, where the company is based.

The proportion of sales from so-called growth economies will increase from the current 35 percent level as Philips is seeking to outpace economic growth in those nations by 1.5 times, Van Houten said today.

The CEO is betting LED-lights, electric toothbrushes and bodyscanners will gain traction in Russia, Mexico and other nations with a growing middle class. A drive for energy efficiency and increasing demand for more affordable, and accessible healthcare are additional trends to be harnessed by Philips, Van Houten said.

’We have to make sure we capture these huge opportunities,’’ Van Houten said.

With products such as rice cookers in China, the company hopes to tailor its appliances to local needs, he said.

Growth geographies increased sales by 10 percent last year, against a 3 percent shrink in Europe and a 2 percent growth in North America.

Philips competes with Siemens AG and General Electric Co. in health-care equipment such as medical scanners as well as in lighting. The companies posted quarterly results last month month that beat estimates, partly as a result of a rise in health-care orders with growth coming from emerging-markets such as China.

To contact the reporter on this story: Maaike Noordhuis in Amsterdam at mnoordhuis@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net