Philips suffers €1.3bn loss

Lightbulbs-to-TV firm Philips today revealed it had slumped to a €1.3bn loss after it wrote down the value of some of its businesses amid the squeeze in consumer spending.

Sales in its consumer lifestyle division were down 2% in its second quarter as falling sales of entertainment products, such as stereos and DVD players, were only partly offset by an “encouraging” rise in its other products including shavers and electric toothbrushes.

The Amsterdam-based company said its lighting arm, the biggest lightbulb maker in the world, saw “disappointing” sales growth of 4%.

The group took a €1.4bn impairment charge which pushed it into a loss in the quarter. This compares to profits of €262m in the previous year.

Its sales declined 2.6% to €5.2bn, while underlying profits, which do not include the impairment charge, fell by 27% to €370m.

Chief executive Frans van Houten said he “does not expect a material performance improvement in the near-term” because consumer spending will remain weak as the global economy falters.

But he said the group was addressing its issues by making €500m of cost savings and “instilling a new culture of entrepreneurship and accountability”.

Although its consumer markets were weak, its healthcare division, which makes equipment such as cardiac equipment used in hospitals, showed “strong growth”, with sales and earnings growth of 8%.

Last month, the group warned that its underlying profits were to be hit amid worse-than-expected demand in western Europe.

Philips’ warning shocked a market expecting a turnaround in the firm’s consumer lifestyle division since it spun off its loss-making TV unit into a joint venture with China’s TPV Technology earlier this year.