Philips first quarter profits fall as sales slip
AMSTERDAM (AP) — Royal Philips NV, the maker of lights, consumer appliances and health-care equipment, on Monday 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 162 million euros ($212 million) was down from 183 million euros in the same period of 2012, when it enjoyed 119 million euros worth of one-time gains, notably from the sale of its Senseo coffee maker brand. Sales fell 1 percent to 5.26 billion euros.
"We reiterate our view of a slow first half to 2013, due to adverse market trends, especially in Europe and the U.S.," said Chief Executive Frans van Houten in a statement.
It managed to increase its underlying profit margins, but only thanks to cost cuts.
Philips said weak construction activity was hurting its lighting division, though LED light sales were up 38 percent 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 percent on hospital budget cuts and new orders declined.
Consumer appliances such as electric shavers and coffee makers did better, with sales up 9 percent. Van Houten attributed that to the company's strategy of tailoring its product offerings to individual markets.
By geography, sales fell 2 percent in developed markets, which account for two-thirds of sales. They increased by 2 percent in developing countries, which Philips calls "growth" markets.
Shares fell 2.2 percent to 21.19 euros in early Amsterdam trading.