Philips losses hit €1.6bn – launches share buyback scheme

18 Jul 2011

Dutch electronics giant Philips reported a 4pc sales increase to €5.4bn. The company showed a loss, however, of €1.3bn – a massive €1.6bn drop due to impairments of €1.3bn.

CEO Frans van Houten warned that operational risks remain in the current uncertain economic environment.

However, van Houten warned that operational risks remain.

“Our second-quarter results were impacted by near-term operational challenges, weaker markets and a significant impairment charge.

“We are taking necessary steps to improve performance and we are confident in the prospects of our portfolio.

“Healthcare performed strongly, improved earnings and growing comparable sales by 8pc over last year. In Consumer, Lifestyle, we are encouraged by growth in all businesses, excluding Lifestyle Entertainment, through investments in growth affected earnings in the quarter. Lighting sales grew 4pc comparably with our LED portfolio up a strong 21pc. However, Lighting results in the quarter were disappointing,” van Houten said.

Cost-reduction scheme and share buyback programme

Van Houten said Philips will be executing a €500m cost-reduction programme.

He said that given the company’s confidence to grow organically it will be launching a €2bn share buy-back programme.

“We do not expect a material performance improvement in the near term as operational risks and issues remain, and also considering the current uncertain economic environment. However, we are pleased to give clarity on our mid-term trajectory ahead of plan, reflecting our ambitions for the future.”

Photo: Philips CEO Frans van Houten

Philips presentation

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years