Philips Swings To Loss As Europe's Economy Falters
Philips swung to a net loss in the fourth quarter of last year as cuts in government budgets ate into its healthcare equipment business and a slowdown in construction activity hit its lighting operations.
Europe's largest consumer electronics maker posted a net loss of 160 million euros after profits of 465 million a year earlier and the group warned prospects for this year are no brighter.
"We are cautious about 2012 given the uncertainty in the global economy, and Europe in particular," Chief Executive Frans van Houten said on Monday.
"Our fourth quarter results were impacted by weak European sales, postponement in deliveries of existing orders in our healthcare sector, and inventory correction actions and other operational issues in our lighting business."
Philips makes almost 30 percent of its sales in Europe, where they fell 5 percent in the fourth quarter. Government austerity programs in Europe are squeezing hospital budgets and some have put orders for the latest equipment on hold.
European consumers are increasingly keeping their wallets closed, hitting sales of Philips lightbulbs and gadgets like electric toothbrushes, resulting in huge amounts of unsold stock.
Austerity is also putting a damper on European construction markets and developers are holding back on kitting out entire complexes with the latest lighting systems.
The latest numbers from the company are in line with a profit warning earlier this month.
The firm said on Monday previously announced restructuring measures, including 4,500 job cuts, will help it weather the weakness in its markets and it forecast some improvement in underlying margins by the end of this year, excluding the impact of further restructuring charges it expects to take.
"The first half of 2012 will see the impact of these charges and overall we are cautious about the development of the first half of the year. It is not going to be an easy first half," van Houten said.
Since van Houten took the top job in April, he has issued two profit warnings, reset financial targets, slashed jobs, seen several top executives replaced and tried to hive off the loss-making TV business.
Speaking on TV shortly after announcing the fourth-quarter results, van Houten said he was confident the sale of the TV business, which still needs to be approved by Hong Kong-based TPV shareholders and regulators, will close in the first quarter.
TPV is holding a shareholder meeting on Feb 22 to vote on the deal. Philips booked a 272 million loss in the fourth-quarter for the TV unit.
The Dutch group competes with Samsung and LG Electronics among others in consumer electronics, and with General Electric and Siemens in the hospital and lighting markets.