Philips’ net profit slumps in first quar­ter as sales edge higher

The China Post - - BUSINESS INDEX & -

Royal Philips NV, the world’s big­gest light­ing maker, said Tues­day higher re­struc­tur­ing costs wiped out gains from higher sales to re­duce first-quar­ter net profit by 27 per­cent to 100 mil­lion eu­ros (US$109 mil­lion).

Sales rose 14 per­cent to 5.34 bil­lion eu­ros, as a strong growth from Philips so-called “Con­sumer Life­style” di­vi­sion, which in­cor­po­rates any­thing from den­tal hy­giene to kitchen ap­pli­ances and hair re­moval tools, off­set slow or fall­ing sales from its health care and light- ing di­vi­sions.

Re­struc­tur­ing costs, re­lated to the com­pany’s split, to­taled 58 mil­lion eu­ros. Philips, which be­gan life as a light­ing com­pany in 1891, last year an­nounced an up-to 400-mil­lion-euro plan to split off its light­ing busi­ness to cre­ate two sep­a­rate com­pa­nies. The move is aimed at mak­ing it eas­ier for the light­ing arm, seen as a dom­i­nant seller of LED lights, to break into new mar­kets.

CEO Frans van Houten said “in­vest­ments, cou­pled with neg­a­tive cur­rency ef­fects, are the main rea­sons for the low prof­itabil­ity” in Philips health care busi­ness, which com­petes with GE and Siemens in the hos­pi­tal scan­ner busi­ness. Houten took di­rect con­trol of the di­vi­sion him­self last year af­ter pre­vi­ous health care boss Deb­o­rah DiSanzo de­parted amid poor re­sults.

Philips also said prepa­ra­tions to split off the light­ing busi­ness would take “at least un­til the end of 2015,” with an IPO to fol­low in the first half of 2016. Al­ter­na­tives to an IPO are also be­ing con­sid­ered, Philips said.

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