PHILIPS Electronics warned of soft fourth quarter profits yesterday, blaming weak European consumer markets that are leading to charges for inventory it cannot shift.
Europe’s biggest consumer electronics maker said it will report a fall in underlying fourth quarter earnings to about €500m (£413m) from €910m a year earlier.
The earnings report, due at the end of January, would also show slowing sales growth across its biggest divisions and unspecified charges for products that are still sitting in its warehouses.
“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,” chief executive Frans van Houten said.
Government austerity programmes in Europe are squeezing hospital budgets and some have put orders for the latest equipment on hold.
The latest warning follows a prediction in June of lower profits at the lighting division, its biggest alongside healthcare equipment, due to weak consumer demand in Europe and crisis-hit construction markets. That was just a few months after Van Houten took the helm.
Philips said yesterday that overall sales growth in the fourth quarter will probably come in at less than five per cent.
City A.M. Reporter