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© Philips Electronics Production | July 18, 2011

Philips reports EUR 1.34<em>bn</em> loss in 2Q

Royal Philips Electronics NV initiates a cost reduction program of EUR 500 million, after reporting a loss of EUR 1.34 billion (a decline in net income of EUR 1.61 billion compared to 2Q/2010.

• Net income showed a loss of EUR 1,345 million, a decline of EUR 1,607 million compared with Q2 2010, largely attributable to goodwill and intangible-asset impairments of EUR 1,385 million. Excluding impairments, the lower income was attributable to lower operating earnings and a loss in discontinued operations. • The Q2 annual impairment review has led to an adjustment of the discount rate across Philips and selected adjustments of the pre-recession business cases, leading to a EUR 1,345 million impairment. • EBITA decreased by EUR 136 million year-on-year to 7.1% of sales, due to lower earnings at Lighting and Consumer Lifestyle, partly offset by lower restructuring and acquisition-related charges. Excluding those charges, EBITA amounted to 7.6% of sales. • Tax charges were EUR 39 million lower than in Q2 2010, mainly due to lower taxable earnings. • Net income includes an after-tax loss of EUR97million in discontinued operations, representing the results of the Television business, including an asset write-down associated with the disentanglement. Frans van Houten, President and CEO of Royal Philips Electronics: "Healthcare performed strongly, improving earnings and growing comparable sales by 8% over last year. In Consumer Lifestyle, we are encouraged by growth in all businesses, excluding Lifestyle Entertainment, though investments in growth affected earnings in the quarter. Lighting sales grew 4% comparably, with our LED portfolio up a strong 21%. However, Lighting results in the quarter were disappointing." Philips has initiated a cost reduction plan of EUR 500 million. However, details did not specify if job cuts are planned.
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