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Weaker European economy pushed Philips to Q4 loss

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Weaker European economy pushed Philips to Q4 loss
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Philips swung to a net loss in the final three months of 2011. It blamed cuts in government budgets for reducing healthcare equipment sales and said a slowdown in construction activity hit lighting demand.

The net loss was 160 million euros, that compared with a 465 million euro profit in the same period a year earlier.

Crisis hit Europe was a particular problem with 30 percent of Philips sales are made there. They were down five percent in the fourth quarter, as people cut back on purchases leaving the company with huge amounts of unsold stock.

Chief executive Frans van Houten told euronews it is changing the focus away from consumer products: “Philips is 66 percent a business-to-business company, so the consumer part of Philips has become proportionally smaller. We see a lot of great growth opportunities in health care, as well as in professional lighting. We have a good programme in place, called Accelerate, where we speed up innovation to markets, where we are looking at reducing our costs, improving margins and working capital.”

Although it is still Europe’s largest consumer electronics company, that part of the business only accounted 26 percent of Philips output last year, down from 43 percent just three years previously.

Healthcare now was the largest element at 40 percent, and lighting made up 34 percent.

As for the prospects for this year, van Houten had a warning: “In 2012, we are very cautious about the first half of the year, as first of all the economy is very uncertain, but also we will see some restructuring charges hitting the bottom line. In the second half of the year we expected operating margins, already to improve in all three sectors.”