updated 03:15 pm EDT, Mon July 18, 2011
Philips posts $1.8 billion quarterly loss
Philips on Monday revealed a quarterly loss of 1.3 billion euros ($1.8 billion) after a 1.4 billion euro writedown on healthcare and lighting acquisitions. The company otherwise faced rising costs of raw materials, dropping consumer confidence and government cutbacks in the healthcare sector both in Europe and the US. At the same time, Philips gave a weak outlook for the next two quarters and lowered the profit margin targets for its three core businesses for 2013. The company also promised it would cut costs by 500 million euros ($701 million).
In June, the company warned of lower second-quarter profits and slowing sales growth in its lighting business and consumer electronics divisions due to lower European demand. Siemens, which competes with Philips in the medical equipment and lighting products markets, also warned of slower than usual growth in June.
The 500 million euro cost-cutting scheme will extend into 2014 and focus on the company's high overhead costs but it won't involve shutting or selling businesses. A two billion euro share buyback program due for completion next year was also announced.
Chief executive Frans Van Houten, who took over the position in April of this year, set a sales goal growth of between 4 and 6 percent on Monday, with earnings for the group before interest, tax and amortization margins at 10-12 percent.