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Philips posts 59 mln euro loss in Q1

ROYAL Philips Electronics NV, the world's largest maker of lights, posted a net loss of 59 million euro ($78 million) in the first quarter today, hurt by declining sales of items such as cars and televisions.

In the same period a year ago, the industrial conglomerate had net profit of 294 million euro. Sales fell 15 percent to 5.08 billion euro.

Philips is among the first of Dutch blue chip companies to report earnings, and its outlook will be fodder for analysts and investors looking for signs the global economic downturn is easing. However, Philips gave no hint of seeing any recovery in its report.

Chief executive Gerard Kleisterlee said in a statement the company had seen "a significant further deterioration" in its markets in the three months after the end of 2008, and the company expects no improvement in the second quarter.

Among Philips' major divisions, it showed a 19 percent fall in lighting sales, a 2 percent fall in sales of health care equipment, and a 25 percent decline in consumer electronics sales.

Those divisions showed operating earnings of 7 million euro, 75 million euro, and a loss of 46 million euro, respectively.

"Despite the fact that we expected weak results, the actual numbers still disappointed," said analyst Eric de Graaf of Petercam Bank in a note on the earnings.

De Graaf maintained an "Add" rating on shares, saying Philips has a solid balance sheet and its stock is relatively cheap.

Shares rose 1.2 percent to 12.365 euro in Amsterdam.

Philips said the market for health care equipment, usually seen as insulated from economic downturns, had worsened in developing countries. Sales of health care equipment rose in developing countries, but margins worsened everywhere.

The company noted that with auto sales continuing to be weak - automobile makers are a major buyer of its lights - the outlook for 2009 is not improving.

"Ongoing deterioration in the global economy during the first quarter has resulted in weaker demand in our key markets than previously anticipated," Philips said.

It added: "We expect demand in the second quarter to be broadly in line with the first three months of 2009."

Philips said it was "accelerating" previously announced cost-cutting moves. The company cut 7,000 jobs in the fourth quarter to end the year with 121,000 workers, and then announced plans to shed 6,000 more.

Philips today it had reduced its work force by 5,600 in the first quarter.


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