The new Philips CEO can learn from the old one

Frans van Houten, CEO of Koninklijke Philips (PHG.AS), transformed the Dutch conglomerate from a stodgy industrial conglomerate into a medical-technology specialist.

Including dividends, the shares returned more than 200% during his first ten years as CEO, up to April 2021.

He separated out superfluous units such as lighting and household appliances. Philips is now worth 17 billion euros, down from 46 billion euros in April of last year.

The new CEO of Philips (Philips) must close a huge valuation gap with rival Siemens Healthineers (SHLG.DE), which trades at 22 times forward earnings versus Philips’ 13 times.

Despite the breakup of van Houten, the company has a personal healthcare division that sells toothbrushes, razors, and baby bottles.

Hiving it off could improve Jakobs’ focus, valuation, and chances of a similarly long tenure.