Philips' first quarter profits fall as sales slip

Monday 22 April 2013 09.39
Philips' sales fell 1% to €5.26 billion in first quarter of 2012
Philips' sales fell 1% to €5.26 billion in first quarter of 2012

Royal Philips, the maker of lights, consumer appliances and health-care equipment, reported a fall in first quarter profit due to weak sales and because last year's figures included one-time gains.

Philips' first-quarter net profit of €162m was down from €183m the same period last year.

It had enjoyed €119m worth of one-time gains last year, notably from the sale of its Senseo coffee maker brand.

Sales fell 1% to €5.26 billion.

"We reiterate our view of a slow first half to 2013, due to adverse market trends, especially in Europe and the US," chief executive Frans van Houten said in a statement.

The company managed to increase its underlying profit margins in the three month period, but only thanks to cost cuts.

Philips said weak construction activity was hurting its lighting division, though LED light sales were up 38% as the new technology continues to replace traditional incandescent bulbs.

Philips is the largest maker of lights by sales. The company said orders for its healthcare equipment were also weak, particularly in North America, where sales fell by more 10% on hospital budget cuts and new orders declined.

Consumer appliances such as electric shavers and coffee makers did better, with sales up 9%.

Van Houten attributed that to the company's strategy of tailoring its product offerings to individual markets.

By geography, sales fell 2% in developed markets, which account for two-thirds of sales. They increased by 2% in developing countries, which Philips calls "growth" markets.

Keywords: philips, bulbs