Philips issues financial update
Frans van Houten, CEO of Philips
Philips has released an update on its expected fourth quarter 2011 financial results.
Compared to the fourth quarter of 2010, the company is expecting a mid single-digit sales growth within its Lighting sector. The company has blamed the figure on operational issues in Consumer Luminaires, Lumileds and macroeconomic factors. According to Philips, these factors impacted on pricing in the Consumer Lighting businesses and so also affected the overall Lighting results.
Incidental charges, primarily relating to the disposal of slow moving inventories, as well as adjustments in production volumes, were also described as contributors to these results. However, the company says it has now reduced inventory levels and improved cash flow.
Adjusted EBITA* for the fourth quarter is expected to be around 3 to 4 per cent of sales, with the reported EBITA expected to be around 2 per cent.
“Our expected fourth quarter financial results have been affected by the weakness in Europe, which has impacted our Healthcare business, as well as pricing in our Consumer Lighting business,” said Frans van Houten, CEO of Philips. “We have taken measures to address our inventory situation in the Lighting business, which also had an impact on earnings for the quarter.”
The fourth quarter expectations for the Philips Group Adjusted EBITA* are between 8 and 9 per cent of sales, which corresponds to a reported EBITA between 7 and 8 per cent. This reported EBITA for the group is estimated at around EUR 500 million. Philips forecasts that the free cash inflow for the fourth quarter of 2011 will be around EUR 1 billion, a 0.2 billion drop from the fourth quarter of 2010. The anticipated Group cash balance at the end of the quarter is approximated at EUR 3 billion, with all figures excluding the Television business, which is part of discontinued operations.
The quarterly result as well as the company’s full-year financials will be reported on January 30, 2012.
*Adjusted EBITA is EBITA excluding restructuring and acquisition-related charges.
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