Koninklijke Philips NV said Tuesday that it will launch a review of options for its domestic-appliances business, as it posted a 17% fall in fourth-quarter net profit.

Philips PHIA, -2.39% said it will start the process of creating a separate legal structure as it evaluates options for future ownership of its domestic-appliances business, which generated sales of 2.3 billion euros ($2.54 billion) last year in kitchen appliances, coffee, garment-care and home-care appliances. The process is expected to be completed in 12 to 18 months, it said.