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Poor lamp sales contributes to profits warning for Philips

10 January 2012 13.30 GMT


(Netherlands) - Philips warns that its fourth-quarter profits were worse than expected due to a weak European market and poor performance in lamp sales.

Philips has announced that it expects a mid single-digit comparable sales growth in the Lighting sector compared to the fourth quarter of 2010.

Continued operational issues in Consumer Luminaires, Lumileds and macroeconomic factors, which impacted pricing in Philips' Consumer Lighting businesses (mainly lamps), have impacted the Lighting results. In addition, incidental charges, primarily relating to the disposal of slow moving inventories, as well as adjustments in production volumes further affected the bottom line. These actions have led to reduced inventory levels and improved cash flow. Adjusted EBITA for the fourth quarter is expected to be around 3 to 4% of sales. The reported EBITA is expected to be around 2%.

Group sales for the quarter are expected to show mid single-digit comparable growth over the fourth quarter of 2010. The group's Adjusted EBITA (excluding restructuring and acquisition related charges) for the quarter is expected to be between 8 and 9% of sales, which corresponds to a reported EBITA (Earnings before interest, tax and amortisation) between 7 and 8%. The reported EBITA for the group is estimated to be around EUR 500 million. Free cash inflow for the fourth quarter of 2011 is expected to be around EUR 1 billion compared to an amount of EUR 1.2 billion in the fourth quarter of 2010. Group cash balance at the end of the quarter is expected to be approximately EUR 3 billion. All figures exclude the Television business, which is part of discontinued operations.
 
"Our expected fourth quarter financial results have been affected by the weakness in Europe, which has impacted our Healthcare business, as well as pricing in our Consumer Lighting business," said Frans van Houten, CEO of Philips. "We have taken measures to address our inventory situation in the Lighting business, which also had an impact on earnings for the quarter. Our Consumer Lifestyle business, which was the first to start implementing the Accelerate! change and performance improvement program, is beginning to show early signs of improvement. While we are disappointed with the results, we are confident that by continuing to execute on our change plans, and delivering on our cost reduction plans, we will improve the operations of the company and achieve our 2013 mid-term financial targets of 4-6% sales growth, 10-12% reported EBITA, and 12-14% ROIC."

www.philips.com

 

Philips CEO Frans van Houten: "disappointed with the results"
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