Philips announces 2.8 billion euro profit drop

Philips announces 2.8 billion euro profit drop

While most analysts expected Philips to announce disappointing results, almost no one had thought they would be this devastating. The Dutch electronics giant suffered a net loss of 1.3 billion euro in 2011 and expects that at least the first half of 2012 will not be much better.

Discontinued operations cost dearly

After 2010's 1.45 billion euro profit, the 1.29 billion loss of 2011 is a bitter disappointment. A similar evolution was made in the fourth quarter, going from +465 million in 2010 to -160 million last year. Philips mainly blamed a “higher loss from discontinued operations” and the struggle to sell the Television division to the Chinese manufacturer TPV Technology, with whom Philips are starting a joint venture. Even the divisions Healthcare and Lighting – usually strongholds – have underperformed in 2011.

 

There was still time for positive news, as the quarterly turnover grew to 6.7 billion euro (compared to 6.5 billion in the last quarter of 2010) and annual turnover reached 22.6 billion euro (slightly better than 2010's 22.3 billion). Operational profit, however far smaller than in 2010, was not below expectations at 503 million for the last quarter (913 million in 2010) and 1.7 billion for the whole year (2.6 billion in 2010).

 

Counting on job cuts to pay off

Philips had already issued a profit warning on 10 January, saying that the fourth quarter of 2011 would be “disappointing”. CEO Frans Van Houten now warned that the first half of 2012 will not be better, given the “uncertainty in the global economy, and Europe in particular.”

 

Focussing on Philips itself, he expects “2012 results to be affected by the previously communicated restructuring charges and one-time investments aimed at improving our business performance trajectory, as part of the multi-year Accelerate! Program.” Philips will cut 4500 of its 117,000 jobs this year, especially in the Netherlands, where 10% of all jobs will be lost.

 

Van Houten hopes these cuts will lead to “the underlying operating margins and capital efficiency in the sectors to improve in the latter part of 2012.” Philips hopes to reach a profit margin of 10% next year, compared to 11.5% in 2010, but only 7.4% in 2011.

Questions or comments? Please feel free to contact the editors


Apple sales keep slipping

03/05/2017

Apple once again sold fewer iPads and iPhones in the second quarter of its fiscal year, but despite that, the American technology company increased its turnover and profit results.

Media Markt presents: experience 2.0

24/04/2017

The store as an amusement park: an elaborate experience strategy is how Media Markt will counter its online competitors. The new pilot stores in Wilrijk and Eindhoven give shoppers an overview of all the latest electronic gadgets.

Google wants to invest a lot in OLED screen production at LG

10/04/2017

Google intends to invest 1 billion won (830 million euro) in technology firm LG’s OLED screen production. These are used in smartphones, but are often in short supply.

Samsung presents strong first quarter results

07/04/2017

Korean electronics company Samsung’s preliminary results for its first quarter of 2017 were better than analysts had forecast. According to the company, the past quarter was its best in three years' time.

Swatch develops own OS for smartwatches

27/03/2017

Swiss Swatch Group is currently developing its own smartwatch OS to rival Apple and Google’s operating systems, requiring less battery power and better data protection.

Retailers seek certainty when implementing new rules for energy labels

27/03/2017

Content provided by EuroCommerce - Retailers and wholesalers are pleased with the simplification of energy labelling rules agreed by the European Parliament and the Council. Yet they warn that inconsistent or too rigid application of the rules could cause confusion and uncertainty.

 

Back to top