The FINANCIAL — Dutch electronics giant Royal Philips Electronics Monday swung to a net loss as weak market conditions in Europe and losses from discontinued operations, notably its TV business, weighed heavily, according to London Stock Exchange.
Chief Executive Frans van Houten said he's cautious about 2012, "given the uncertainty in the global economy, and in Europe in particular."
Philips, which competes with General Electric and Siemens AG, posted a net loss of EUR162 million on sales of EUR6.71 billion in the three months to Dec. 31. This compares with a net profit of EUR463 million on sales of EUR6.5 billion in the same quarter the year before.
Philips said its loss from discontinued operations in the period was EUR272 million, related to its TV business.
Philips signed a deal in November to turn its loss-making television operations into a joint venture with Hong Kong-listed TPV Technology, one of the world's biggest makers of computer monitors. The agreement gives TPV a 70% stake and Philips the remainder. It was finally clinched after months of talks, which turned into a cliffhanger as the global economy deteriorated.
Philips said earlier the deal will cost EUR270 million on fourth-quarter pre-tax profit on top of an earlier provision of EUR110 million, which weighed on quarterly pretax profit. Closely-watched earnings before interest, taxes and amortization came in at EUR503 million, down from EUR913 million a year ago.
Philips, whose products range from light bulbs to medical scanners, warned earlier this month that weak market conditions, notably in Europe, would bite into operating profits in 2011's final quarter.
"While we are concerned about the economic environment, all of us at Philips are fully committed to improve our operational performance to achieve our 2013 financial targets, van Houten also said in a message.
In a bid to stem falling profits, Philips plans to cut 4,500 jobs globally, 1,400 of them in the Netherlands. Along with other cuts, it aims to deliver savings of EUR800 million by 2014. Restructuring charges will also weigh on 2012 results, the company warned.
Siemens' Chief Executive Peter Loescher also warned last week that "the uncertainties of the ongoing debt crisis have left their mark on the real economy."
The Munich-based company, which competes with Philips in the lighting and healthcare sector, posted a 16% slump in net profit in the three months to December.
Philips has issued two profit warnings since van Houten took the helm last April. The company's market capitalization has shrunk by about a third over the past 12 months.
Philips shares closed Friday at EUR15.58, valuing the company at roughly EUR16 billion.
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