Netherlands-based health tech-focused group Koninklijke Philips' (Philips) credit metrics should improve in 2017-2018 following the disposal of Lumileds. Additionally, the solid free operating cash flow generation of the health tech business supports our view that the financial risk profile of the group has improved. We are however removing ratings uplift for industrial diversification as lighting is no longer viewed as a core business for Philips. We are therefore affirming our 'BBB+/A-2' long- and short-term corporate credit ratings on Philips and our 'BBB+' and 'A-2' issue ratings on the senior unsecured debt. The stable outlook reflects our view that Philips' operating performance should remain stable, driven by the positive growth prospects of the health tech business. On Dec. 16, 2016, S&P
