Philips has surprise investors by revealing a 1.3 billion euro quarterly net loss. At the same time the Dutch group said it would cut 500 million euros of costs by 2014 and announced a two billion euro share buyback programme to be completed in the next year.
It recently blamed weak sales in Europe and the US for profit warnings at two key divisions – lighting and its consumer business, which makes everything from toasters to shavers.
Philips booked a 1.4 billion euro charge in the second quarter from writedowns on acquisitions at its healthcare and lighting divisions, reflecting a weaker market outlook.
“The world seems to be riskier place with a lot of volatility and overall GDP growth that has been slightly set back,” Philips Chief Executive Frans van Houten told reporters in a conference call. Van Houten stressed the group would not shut or sell any of its businesses as it seeks to cut costs.
Some bankers and analysts have said that Philips should get out of the entire consumer electronics division as it is struggling to compete with lower-cost Asian makers of consumer electronics and faces tepid consumer confidence and weak economic growth in Europe and the US.
Philips shares have fallen 30 percent in the past twelve months versus a 16.5 percent rise in the sector index. The buyback programme helped them to rise on Monday.