Philips announces 'disappointing' lighting resuts
Following on from its June profit warning, Philips has announced ‘disappointing’ growth figures for its lighting division and overall losses of €1.3 billion.
The company reports that worse than expected demand in Western Europe hurt its performance in the second quarter of this year and that it will be making company-wide cost reductions in the region of €500 million to address the situation.
The lighting arm of the business has reported 4 per cent comparable sales growth in the second quarter of 2011, down from mid-single-digit growth in the first quarter. This was driven by double digit growth at Professional Luminaires and Lighting Systems & Controls. Lamps and automotive reported moderate sales growth, whereas Consumer Luminaires and Lumileds showed a decline.
LED based sales grew 21 per cent compared to Q2 2010, representing 15 per cent of total lighting sales. Traditional lighting sales declined.
In addition, the company took an impairment charge of €530 million in its lighting division due to slow growth. Impairment tests are usually carried out in the second quarter, and the charges come from major acquisitions completed in 2008 before the economic downturn.
After their first quarter results the company had signalled that its earnings would not be as strong in the reminder of 2011, warning of ‘headwinds’ to its supply chain after the Japanese tsunami and nuclear disasters.
Philips chief executive Frans van Houten said he did not expect the company’s performance to improve in the near term. “We do not expect a material performance improvement in the near term as operational risks and issues remain, and also considering the current uncertain economic environment,” said van Houten.
This article was amended at 11.30 on 19 July. The original article might have been interpreted as suggesting Philips’ losses of £1.3 billion were in the lighting division alone.