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Philips posts 59-million euro Q1 loss news
14 April 2009

Royal Philips Electronics NV, Europe's largest consumer electronics company reported a quarterly loss of 59 million euros as sales in the consumer lighting units fell in the continuing economic downturn.

Chief executive officer Gerard Klisterlee said the quarter saw Philips experience a ''significant further deterioration'' of its markets. The health-care division continued to remain in the negative on weak markets in US Philips said.

Analysts had hoped that the health care division would fare better but that did not happen.

Sales plunged 15 per cent to 5.08 billion euros failing short of the median mark of 5.19 billion euros. Sales at the health-care division were down 2 per cent to 1.74 billion euros. Consumer lifestyle revenues fell 33 per cent to 1.76 million euros from a year earlier while lighting division sales slipped 15 per cent to 1.5 billion euros.

According to the company the demand for the company's products over the second quarter will be in line with the preceding three months. In a statement Kleisterlee said the company expects no material change in the situation in the current quarter. He added that while the effects were strongly felt in the activities catering to the consumer market and the construction and automotive industries, they are now being felt in the health care sales too.

In January Philips had said it would cut 6,000 jobs and stop its 5 billion-euro share buyback in the wake of the first quarterly loss the company suffered in almost six years.

The world's largest light bulb maker said it would cut annual costs by more than 500 million euros.

The company said its cost reduction plans had gone well in the quarter with savings expected to exceed 500 million euros on an annualized basis by end 2009.

Kleisterlee expressed confidence that Philips would come out of the recession as a stronger company. He said the company's portfolio of leading businesses was not immune to recession, but is certainly more resilient than the company's portfolio in the previous downturn.

Despite the weak first quarter performance, Philips' shares rose 7.1 per cent in recent trading. Analysts expect earnings to gradually improve as Philips started early in reducing costs.

In recent years, Philips has embarked on a transformation from an eletronics-manufacturing company into a technology company focused on lifestyle and health care to better deal with economic cycles.

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Philips posts 59-million euro Q1 loss