Weak TV sales drag Philips below target

City A.M. Reporter
PHILIPS ELECTRONICS blamed television sales for disappointing fourth-quarter profit and said western consumers would be reluctant to spend this year, adding urgency to its drive into emerging markets.

Shares in the Dutch consumer appliances, healthcare and lighting group, which is seeking to boost sales in fast-growing countries including China and India, tumbled more than six per cent after it posted results yesterday.

At close, the stock was down 5.45 per cent at €23.23, the second-biggest faller on the FTSEurofirst 300 index of top European shares.

Philips competes with General Electric and Germany’s Siemens, which is due to report today.

Philips yesterday posted net profit of €465m (£397m), well short of the €532m average forecast.

“Philips results are somewhat disappointing mainly due to the weaker-than-expected consumer lifestyle division,” said Sjoerd Ummels, ING analyst.

“We’ve had two years of weak consumer sentiment in mature markets, and apparently there’s no end in sight.”

Two new executives are set to take the helm in April, to tackle the twin challenge of weak demand in mature markets such as Europe and, to a lesser extent, the US and expansion in emerging markets that also includes Russia, central and southeast Asia.

Frans van Houten starts as chief executive, and Ron Wirahadiraksa becomes finance chief.

Both men have restructuring and cost-cutting track records and have experience in Asia.