TV dragging Philips down globally

By Matthew Henry

AMSTERDAM: Philips’ television business remains a drain on the Dutch company’s purse as it reports a 75 per cent drop in first quarter profit, due largely to pricing pressure in the flat panel market.

Philips posted earnings before interest, tax and amortization (EBITA) of just 265 million Euros ($AU452 million) for the first quarter 2008, down from 370 million Euros ($AU630 million) in Q1 last year.

Philips president and CEO, Gerard Kleisterlee, said good financial performance in other sectors such as medical equipment, domestic appliances and personal care products was mitigated by poor TV sales, among other factors.

“Unfortunately our results are clouded, more than we like, but the adverse situation in our TV business, significantly lower incidental license income and some acquisition-related charges impacting EBITA,” he said.

Philips chief financial office Pierre Jean-Sivignon told AP that the US market remains a ‘black spot’, but the TV market is tough across all regions.

The company expects margin pressure on its TV business to continue this year.

However, a recent alliance forged with Japanese manufacturer Funai in North America was highlighted as ‘decisive action’ in regaining profitability.

“With respect to our TV business we took the decisive action we had promised and I compliment our Consumer Lifestyle team for subsequently coming up quickly with a value-creating solution,” said Kleisterlee.

Philips will focus on retaining a premium brand strategy in Australia and abroad this year when it releases its Design Collection LCDs. The company expects the designer range to particularly appeal to women.

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