Royal Philips Electronics, the largest consumer electronics maker in Europe, reported this morning a decline in its first-quarter profit. As another sign that the slumping U.S. economy is hurting companies overseas, Philips posted a bigger-than-expected 28% fall in its core profit after weak North America television sales offset gains in its health care and lighting businesses. The company's first-quarter net income was 219 million euros ($347 million), lower than 875 million euros reported last year when Philips benefited from higher gains on the sale of stakes. For its overall sales, the world's largest maker of lighting posted a growth of only 1% to 5.96 billion euros ($9.44 billion), while comparable sales saw a decline of 9% in North America, hurt by weak results from the company's TV business.
The company's quarterly earnings figure included a gain of 83 million euros on the partial sale of its shareholding in LG Display Co. Ltd. (NYSE: LPL), Philips stated, while, the prior-year quarter results included a net gain of 733 million euros from the partial sale of the shareholding in Taiwan Semiconductor Manufacturing Co. (NYSE: TSM).
"Our results are clouded, more than we like, by the adverse situation in our TV business," and lower license income, Philips Chief Executive Gerard Kleisterlee stated.
On Friday, Philips' rival General Electric Co. (NYSE: GE) announced an unexpected first-quarter profit drop, reflecting the negative effects of difficult capital markets and the tumbling U.S. economy. It looks like challenging market conditions which which put a curb on consumer spending are continuing to have a bad impact on more an more companies amid fears about a global economic slowdown.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
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