Philips Electronics reported a 28 per cent drop in core profit today, below average analyst expectations, as its television business sank deeper into the red.
The Dutch shavers-to-lightbulbs group said earnings before interest, tax and amortisation (EBITA) fell to €265 million ($419 million) from €370 million the year before and compared with the average of €306 million in a Reuters poll of 14 analysts.
"Our results are clouded, more than we like, by the adverse situation in our TV business, significantly lower incidental license income and some acquisition-related charges," chief executive Gerard Kleisterlee said in a statement.
The Amsterdam-headquartered firm confirmed its target for annual comparable sales growth of at least 6 per cent from 2008 to 2010 and raised its 2010 EBITA margin target to 10 to 11 per cent. It had previously forecast more than 10 per cent.
Philips said it expected "some mature economies" to soften in the wake of a global credit crisis and said it would take steps to keep margins up.
The consumer lifestyle division - which makes TVs, electric toothbrushes, music players and coffee machines - will continue to feel margin pressure in its TV business, Philips said. The operating loss of the television activities widened to €95
million in the first quarter from €51 million a year ago.
"Consumer lifestyle was the big negative of the numbers," said asset manager Rene Bastiaenen of Eureffect. "Philips shares will take some losses, you can count on that."
The company said last week it would stop making TVs for the North American market, where it has been losing money, and has struck a brand licensing deal for North America with Japan's Funai Electric.
Philips two other divisions - healthcare and lighting - both reported core earnings above average analyst forecasts.
The healthcare business, which has been hit by a weak US imaging market due a law change, showed comparable sales growth of 5 per cent and a steady profit margin.
Lighting sales rose 16 per cent to €1.7 billion driven by acquisitions and were up 3 percent on a comparable basis.
Philips shares lost 1.9 per cent on Friday after rival General Electric reported an unexpected first-quarter profit drop, with the slumping US economy hurting its financial, industrial and healthcare units.