Two thirds of Philips' profit evaporated

Two thirds of Philips' profit evaporated

Dutch electronics producer Philips will be glad 2014 is over: its fourth quarter did not help boost sales as both important branches (Health and Lighting) had lower sales. Only the consumer electronics division managed to increase its sales.

Profit dropped two thirds in fourth quarter

Philips had a 2 % turnover drop (adjusted for exchange rate fluctuations) in its fourth quarter, down to 6.54 billion euro. Disappointing sales in its medical equipment division and in emerging markets like China and Russia were mostly to blame. Its health and lighting divisions experienced 3 % turnover drops, while its consumer electronics's turnover grew 6 %.

 

Net profit got hammered in the fourth quarter, from 412 million euro in 2013's fourth quarter to 134 million euro now - a 67 % drop. The company had issued a warning earlier this month that the ailing Cleveland factory, which creates expensive scanning equipment, would hugely impact the numbers. The biggest issue there was that it apparently has had a faulty quality assurance for several years, something which has been remedied now, but which will also impact this year's numbers.

 

"Reform is marathon, not a sprint"

Disappointing sales in the previous quarter ends an abysmal year for Philips. It may have limited its full-year turnover drop to - 1 % (to 21.4 billion euro), its net profit received a devastating blow (- 66 % to 411 million euro).

 

CEO Frans van Houten is careful when talking about 2015: he predicts higher sales and better profit margins, but is still hesitant about the economy's recovery. The previously-stated 4 to 6 % turnover growth in 2016 seems unattainable, he informed everyone during a conference call, but his own position is not in danger. "I am staying. I have always said our company's reform is not a sprint, but a marathon. We have not finished yet."

 

Philips is feverishly trying to make its lighting division an independent entity and it is expected to finalize the sale of its Lumileds and Automotive departments somewhere in the first half of this year.

Questions or comments? Please feel free to contact the editors


Ceconomy (former Metro) mainly achieves online growth

31/08/2017

Ceconomy, the newly-formed electronics company that split off from the Metro Group, grew 1.1 % in its first independent quarter. The owner of Media Markt and Saturn saw its web shops outperform physical stores.

New owner for smartphone manufacturer HTC?

28/08/2017

Taiwanese technology company HTC may be looking for a new owner as competition is becoming stronger. The company is now looking for options to raise funds for a battle plan.

Twelve-year sentence for Samsung's vice-president?

07/08/2017

Prosecutors in the Samsung corruption case have demanded a 12-year sentence for its former vice-president and de facto CEO of the South Korean company at the time, Jay Y. Lee, who has been charged with bribery and embezzlement.

Apple sales drop smaller than expected

02/08/2017

Apple has sold more iPhones in the third quarter of its fiscal year than it did last year, which was a surprisingly more positive feat than analysts had expected. Compared to the second quarter, there was further decline though.

Ceconomy (Media Markt) acquires quarter of Fnac Darty

26/07/2017

Ceconomy, Metro Group’s former consumer electronics division containing Media Markt and Saturn, acquired 24.3 % of Fnac Darty’s shares from the Pinault family.

 Blokker adds household appliance specialist AO.nl to Nextail

21/07/2017

Blokker Holding’s online organization, Nextail, will enter a strategic collaboration with online household appliance specialist AO.nl’s Dutch division.

Back to top