Philips shares plunge after profit warning on weak Europe demand

PHILIPS Electronics warned of sharply lower profits at its lighting division and toasters-to-shavers consumer business yesterday, due to weak demand in Europe.

The profit warning, which wiped 13.5 per cent off the shares, caps a string of disappointments from Philips and suggests consumer demand in Europe is likely to remain fragile against a backdrop of economic uncertainty, particularly in the peripheral Eurozone countries.

The Dutch group, which ranks as the world’s biggest lighting maker, Europe’s largest consumer electronics producer and a top-three maker of hospital equipment, said it would cut costs as part of its wider restructuring.

Philips has struggled to compete with lower-cost Asian makers of consumer electronics, while tepid consumer confidence and economic growth in Europe and the US have hit demand for products ranging from televisions to electric toothbrushes, as well as its street and home lighting systems.

The profit warning “shows that consumers in mature markets are in dire straits,” said Sjoerd Ummels, an analyst at ING who covers Philips.