Advertisement

AMSTERDAM (AP) — Royal Philips Electronics NV, the world's largest lighting maker, said Monday it will slash 4,500 jobs after third quarter earnings fell sharply, hurt by a strong euro, weaker margins and more losses at its television division, which it intends to sell.

Net profit was euro74 million ($102 million) from euro524 million in the same period a year ago, the company said. Revenues declined 1.3 percent to euro5.39 billion. Philips said sales would have risen 6 percent if not for the strong euro.

Philips is responding by cutting jobs, which it says will help it save euro800 million annually.

"We do not expect to realize a material performance improvement in the near term," said CEO Frans van Houten in a statement. He repeated previous financial targets of at least 4 percent sales growth and 10 percent operating margins by 2013.

The company said growth was generally strong in emerging markets and weak in developed economies. Analysts said the results were in line with expectations and shares rose 2.6 percent to euro15.19 in Amsterdam in an overall higher market.

In the lighting arm, operating profit was euro110 million, down from euro193 million, which Philips attributed to weaker consumer sales and higher raw materials costs. However, the company noted it had won some big clients, including France's Carrefour and "a global Swedish furniture retailer," presumably IKEA.

At the company's health care arm, operating profit fell to euro261 against euro282 million. Philips cited higher investment and advertising costs.

In consumer electronics, operating profits fell to euro102 million from euro169 million, mostly due to lower margins.

The company no longer counts the television business as part of continuing operations, but its loss widened to euro54 million from euro15 million a year ago.

In April Philips said it was selling 70 percent of the unit and placing it in a joint venture with China's TPV, but that deal has yet to materialize.

"Overall results reasonably in line with expectations," said analyst Victor Bareno in a note on the earnings. "The main negative is the more cautious remarks on the TV joint venture."

"We think it is essential that Philips closes the deal, but these remarks and longer negotiations suggest the exit will come at a higher cost." He repeated a hold rating on shares with a euro15 price target.

 

Advertisement
Advertisement