Philips posts big drop in first-quarter profit

THE HAGUE: Dutch electronics giant Royal Philips NV yesterday posted a 27% drop in first-quarter profit, hit partly by the costs of restructuring and some acquisitions as it evolves its portfolio.

Net income fell in the first three months to €94 million ($115 million) compared to €128 million over the same period in 2017, the company reported in a statement.

Best known for the manufacture of light bulbs, electrical appliances and television sets, the Amsterdam-based company has gradually pulled out of these activities in face of fierce competition from Asia.

It focuses now more on high-end medical and health technology, such as computer tomography and molecular imaging, as well as household appliances.

Sales in the first quarter stood at €3.9 billion, 2% down on €4.03 billion in 2017.

But the company stressed that was a comparable growth of 5% taking into account such issues as currency fluctuations, and the shedding of the Philips Lighting arm.

“While there is more work to be done, 2018 started well,” said chief executive office Frans van Houten.

Restructuring and acquisition charges came to a hefty €64 million in the first quarter of 2018, compared to just €24 million in the same period last year.

The 2017 first-quarter profit also got a boost from a €59 million gain from selling some real estate.

The group, which sold its first light bulb a few years after it was founded in 1891, moved to list its Philips Lighting division in mid-2016 which joined the Amsterdam stock exchange, the top-tier AEX, in March.

Philips is a global multinational with more than 74,000 employees and income streams in over 150 countries.

Van Houten hailed sales growth in early 2018 particularly in the diagnostics and treatment area, up in comparable figures some 9% on last year.

“Across our markets, we continue to see strong customer interest in our innovations,” said Van Houten.

The company had also “signed eight long-term strategic partnership agreements across the US, Europe and the Middle East,” he said, citing an 11-year deal with Britain’s Wye Valley NHS Trust to provide the latest diagnostic imaging equipment.

Philips remained on target for the 20172020 period of 4% to 6% comparable sales growth, he added.

Van Houten, whose second term at the head of the company is due to end in a year, told reporters on a conference call he would be ready to stay on for another term, if shareholders wished.