Correction From Source: Corrects last year's Net Gains figure in the fourth Para
Dutch consumer electronics giant Koninklijke Philips Electronics NV (PHG, PHGFF.PK) Monday said first-quarter profit declined over 11 percent from last year, as growth in Consumer Lifestyle sales was more than offset by declines in the Healthcare and Lighting segments. The firm confirmed that it sees a slow first half to 2013, amid adverse market trends, particularly in Europe and the U.S.
Frans van Houten, CEO, said, "Weak construction markets negatively impacted overall Lighting sales which were flat compared to the first quarter of 2012. At Healthcare, lower order intake in 2012 impacted sales, mainly in the US.''
Net income attributable to shareholders dropped to 161 million euros ($210.43 million) from 182 million euros in the prior year.
Net income for the quarter dropped to 162 million euros from 183 million euros. Excluding the 119 million euros of net gains in the first quarter of 2012, which stemmed mainly from Senseo transaction and the sale of the High Tech Campus real estate, net income increased by 98 million euros year-on-year.
The company said this increase was driven by improved operating earnings across the three sectors, particularly Lighting.
The results of the Audio, Video, Multimedia and Accessories (AVM&A) business being sold are reported as discontinued operations. The business is being sold to Japanese electronic firm Funai Electric Co., Ltd. for 150 million euros in cash and a brand license fee that relates to a license agreement. The deal would close in the second half of 2013.
Earnings Before Interest, Tax and Amortization or EBITA dropped 11 percent to 402 million euros. EBITA, excluding restructuring and acquisition-related charges, were 421 million euros, or 8.0 percent of sales.
Sales for the quarter were 5.258 billion euros compared to 5.307 billion euros in the prior year. Group nominal sales declined 1 percent, including a 2 percent negative impact of currency and portfolio changes. Sales advanced 1 percent on a comparable basis.
Healthcare sales dropped 4 percent to 2.127 billion euros. Comparable sales slid 1 percent. Customer Services and Home Healthcare Solutions reported low-single-digit growth, while Patient Care & Clinical Informatics sales were flat. Imaging Systems sales had a high-single-digit decline in the quarter.
Consumer Lifestyle sales climbed 9 percent to 1 billion euros. The division's comparable sales increased 10 percent, driven by double-digit growth at Domestic Appliances, high-single-digit growth at Personal Care, and mid-single-digit growth at Health & Wellness.
Lighting sales slid 2 percent to 1.975 billion euros. Comparable sales were in line with last year as double-digit growth at Lumileds and mid-single-digit growth at Automotive were offset by declines in other businesses. LED-based sales climbed 38 percent, and now represent 23 percent of Lighting sales.
Regionally, growth geographies delivered 4 percent comparable sales growth, amid higher sales at Consumer Lifestyle and Lighting, partly offset by a decline at Healthcare.
Sales in the mature geographies dropped 1 percent on a comparable basis, as growth at Consumer Lifestyle was offset by declines at Lighting and Healthcare.
Philips said its overhead cost reduction program has so far led to 549 million euros cumulative gross savings, including 78 million euros realized in the just concluded first quarter. The company reduced inventory levels by 1.4 percentage points year-on-year this quarter, driven mainly by inventory productivity improvements at Healthcare.
The firm reiterated its view of a slow first half to 2013, due to adverse market trends, especially in Europe and the U.S. ''We are committed to reach our financial targets this year,'' Houten added.
The stock fell 0.94 pecent on Friday in Amsterdam to close at 21.67 euros.
For comments and feedback: editorial@rttnews.com