AMSTERDAM: Philips Electronics said on Monday, Oct 18 it was cautious about sales growth as consumer confidence remained fragile, after third-quarter operating profit beat forecasts on cost cuts.
The world's biggest lighting maker reported earnings before interest, tax and amortisation (EBITA) of 648 million euros, compared with the average forecast of 535 million from a Reuters poll of 15 analysts.
Philips, which has been cutting costs and jobs to cope with the downturn, said it would look to exceed its 10 percent adjusted EBITA margin target for the full year after it reached 10.1 percent for the first three quarters.
But the Dutch company, which competes against the healthcare and lighting units of General Electric and Siemens, took a cautious view on revenue for the fourth quarter given the uncertain economic climate and fragile consumer confidence.
"It is still an uncertain economic climate. There is scattered consumer confidence and I think that's what largely explains (our caution)," Philips Chief Financial Officer Pierre-Jean Sivignon told CNBC.
He added the drivers of Philips' growth, such as emerging markets exposure, could be offset by retailers running down inventories and as CONSTRUCTION [] markets continue to slow.
Group sales were 6.16 billion euros, only slightly ahead of the average estimate of 6.14 billion.
Analyst Jos Versteeg at Theodoor Gilissen said Philips' results were good but the better-than-expected margins benefitted from one-off items, and raised concern about the company's cautious outlook.
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CUTTING COSTS
On a divisional basis, Philips had mixed results, with its healthcare unit reporting EBITA of 282 million euros, ahead of estimates of 252 million, and its lighting unit also beating forecasts. Consumer lifestyle slightly missed estimates.
Philips has beaten earnings expectations in recent quarters, but the company warned in July that second-half sales growth would slow to mid-single-digit levels, given sluggishness in the economies of Europe and the United States.
Generic Electric heightened fears about the recovery last week when it reported a sharper-than-expected drop in revenue on slack demand for heavy equipment.
Philips said in a presentation on its website it expects restructuring costs of around 200 million euros in 2010 as it cuts costs by "well over 700 million euros" compared with 2008.
Philips shares have gained 5.5 percent in the two weeks leading up to its results, more than double the 2.5 percent rise in the STOXX Europe 600 Personal and Household Goods index. - Reuters
The world's biggest lighting maker reported earnings before interest, tax and amortisation (EBITA) of 648 million euros, compared with the average forecast of 535 million from a Reuters poll of 15 analysts.
Philips, which has been cutting costs and jobs to cope with the downturn, said it would look to exceed its 10 percent adjusted EBITA margin target for the full year after it reached 10.1 percent for the first three quarters.
But the Dutch company, which competes against the healthcare and lighting units of General Electric and Siemens, took a cautious view on revenue for the fourth quarter given the uncertain economic climate and fragile consumer confidence.
"It is still an uncertain economic climate. There is scattered consumer confidence and I think that's what largely explains (our caution)," Philips Chief Financial Officer Pierre-Jean Sivignon told CNBC.
He added the drivers of Philips' growth, such as emerging markets exposure, could be offset by retailers running down inventories and as CONSTRUCTION [] markets continue to slow.
Group sales were 6.16 billion euros, only slightly ahead of the average estimate of 6.14 billion.
Analyst Jos Versteeg at Theodoor Gilissen said Philips' results were good but the better-than-expected margins benefitted from one-off items, and raised concern about the company's cautious outlook.
''
CUTTING COSTS
On a divisional basis, Philips had mixed results, with its healthcare unit reporting EBITA of 282 million euros, ahead of estimates of 252 million, and its lighting unit also beating forecasts. Consumer lifestyle slightly missed estimates.
Philips has beaten earnings expectations in recent quarters, but the company warned in July that second-half sales growth would slow to mid-single-digit levels, given sluggishness in the economies of Europe and the United States.
Generic Electric heightened fears about the recovery last week when it reported a sharper-than-expected drop in revenue on slack demand for heavy equipment.
Philips said in a presentation on its website it expects restructuring costs of around 200 million euros in 2010 as it cuts costs by "well over 700 million euros" compared with 2008.
Philips shares have gained 5.5 percent in the two weeks leading up to its results, more than double the 2.5 percent rise in the STOXX Europe 600 Personal and Household Goods index. - Reuters
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