Philips says won't meet targets
Dutch Philips became the latest electronics maker to warn on its outlook and restructure to cope with a worsening economic environment, hitting shares as much as 7 per cent on Thursday.
The world's biggest lighting maker and Europe's biggest consumer electronics producer said tougher markets, including construction and automotive, will make it hard to meet mid-term profit targets.
"The downturn we see now is without recent comparison and is developing much faster and deeper than expected," Philips chief executive officer Gerard Kleisterlee told an analyst conference.
The comments follows similar warnings from rivals Sony, Sharp Corp and Panasonic.
But while Philips' consumer business generates nearly half of group revenue, it only contributes around 28 per cent of operating earnings. The healthcare and lighting businesses generate the remainder.
Shedding cyclical businesses such as semiconductor manufacturing - the business now named NXP and still 20 per cent owned by Philips - and focusing on healthcare and lighting was supposed to make Philips a more predictable, stable company. Philips said it will not meet its target of average annual sales growth of 6 per cent until 2010.
Philips already said in October that its consumer business was feeling the impact of slowing economies, particularly in North America and Europe, where it generates the bulk of revenue from products ranging from MP3 players and digital photo frames to water kettles, toasters and shavers.
Fourth-quarter revenue for the Consumer Lifestyle unit is expected to drop 35 per cent, and Rabo Securities analyst Frits de Vries said this could push the unit into the red.