Philips shares tumble after earnings drop
Tuesday 22 April 2014
Philips shares fell more than 7 per cent after the world's largest lighting company said weaker business in emerging markets and a strong euro hurt profits in the first quarter.
It reported earnings down 22 per cent to €314 million for the period – below analyst estimates and group sales fell 4.5 per cent.
Net profit for the quarter of €137 million was 15 per cent below its 2013 first quarter profit figure.
The 123-year old Dutch group, which has been focusing on growing its healthcare and LED lighting businesses, has been particularly hit by the strength of the euro against other currencies and slowing demand for its medical equipment in Russia and China.
The group has been in turnaround mode since chief executive Frans van Houten took over in April 2011. He has cut costs and streamlined its business model.
Last year it sold its home entertainment business to Japan’s Funai Electric, which will make the products under licence, and previously it sold its TV arm.
Instead Philips has focused on growing its healthcare division which includes medical equipment for radiology, cardiology, oncology specialists.
Van Houten said the first quarter results “reflect a challenging start to the year” but he said he is “confident” it will meet its 2016 targets.
Since van Houten joined, its shares have been recovering and rose nearly 80 per cent over two years. But today they slipped 7 per cent — the biggest drop since June 2011.
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