Philips has posted a €103 million (81 million) net loss on third quarter earnings just three weeks after announcing that it wants to split off its lighting division.
The Dutch giant blamed slowing markets in China and Russia and a $466 million (290 million) patent law suit in its healthcare division.
Lighting comparable sales declined 1 per cent year-on-year but LED-based sales grew by 28 per cent. This was offset by a decline of 14 per cent in overall conventional lighting sales. LED sales now represent 40 per cent of total lighting sales, compared to 30 per cent in Q3 2013.
On 28 September the company announced that it was splitting off its lighting business to focus on its high margin consumer and healthcare divisions. The split will result in the formation of two new companies: Lighting and HealthTech that will both continue to use the Philips brand.
A spokesperson for Philips denied that the earlier announcement about the split was designed to appease shareholders ahead of the disappointing third quarter results: “We are talking about two separate things,” the spokesperson said. “One is a strategic announcement to do something that we think is in the best interests of both entities of the business. And the results are a snapshot of something that we do every quarter and as a listed company you have to.”
“As our CEO said, we’re not satisfied and if you look at the numbers it’s clear that you cannot be satisfied. But having said that, if you look at the numbers there are lot of incidentals in there. If you exclude those, we do see some improvement in the underlying business,” the spokesperson said.
The growth in LED sales and the sizeable fine for the Philips healthcare division might seem ironic given that the group has decided to move away from lighting to focus on healthcare.
