By Maarten van Tartwijk
AMSTERDAM-- Koninklijke Philips NV on Tuesday posted a 28% fall
in first-quarter net profit, hurt by costs related to the
separation of its lighting activities, even as it recorded a rise
in sales thanks to the weaker euro.
Philips said net profit dropped to EUR99 million ($108 million)
in the first three months of 2015, compared with EUR138 million in
the same period a year earlier, weighed down by EUR97 million in
restructuring costs and other special items.
The Dutch electronics giant was the latest European
multinational to benefit from the recent weakening of the euro,
posting annual sales growth of 14% to EUR5.34 billion in the
quarter. Comparable sales, which strips out the impact of currency
benefits, rose 2%, the first increase since the fourth quarter of
2013.
Chief Executive Officer Frans van Houten said the return to
sales growth was encouraging, although he voiced concerns for the
remainder of the year. With sluggish economic conditions in China
and Russia and a fragile recovery in Europe, growth will remain
modest this year, he said.
Philips is planning to separate its 123-year-old lighting
business to focus on selling medical-equipment and consumer
lifestyle products. It plans to spin off the bulk of its lighting
business through an initial public offering next year. Last month,
it reached a deal to sell a majority stake in its lighting
components and automotive-lighting operations.
The restructuring is aimed at making Philips simpler and easier
to manage, although it will be a costly and complex operation that
could take its toll on profits. Philips' profit margin came in at
4.3% in the first quarter, down from 5.4% in the prior-year
period.
"Investors have to navigate through 2015 first, which is likely
to be a messy and weak year," Jefferies analyst Peter Reilly said
in a research note.
Philips' health care arm, which makes hospital scanners and
other medical-equipment, recorded comparable sales growth of 1% to
EUR2.26 billion in the first quarter. The unit's profit margin
slumped to 2.9% from 7.7% last year, primarily because of one-offs
and higher investments.
The consumer-lifestyle business, which makes everything from
shavers to coffee machines, recorded a 10% rise in comparable sales
to EUR1.19 billion, driven by strong demand for electric
toothbrushes.
The lighting business was the only division to record a decline
in comparable sales, with revenue sliding 3%. Philips blamed a
faster decline in its conventional lighting business and a weak
performance at its professional lighting activities in North
America.
Mr. van Houten said Philips is making good progress in setting
up a separate company for the lighting business, and reiterated
that the IPO for the unit could occur in the first half of
2016.
Write to Maarten van Tartwijk at maarten.vantartwijk@wsj.com
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