Philips Reports a 17% Decline in Sales to EUR 5.1 billion in Q1

Royal Philips Electronics
  • Global downturn in consumer and lighting markets
  • Healthcare facing a very soft US hospital market; performance in emerging markets and Home Healthcare Solutions remains strong
  • EBITA loss of EUR 74 million includes charges of EUR 77 million
  • Reduction of fixed cost base progressing well and expected to exceed EUR 500 million annualized by the end of this year
  • Rigorous management of working capital continues; cash balance increased, net debt reduced

Gerard Kleisterlee, President and CEO of Royal Philips Electronics: "In the first quarter of 2009 we have seen a significant further deterioration of our markets. While the effects were felt most strongly in our activities that cater to the consumer market and to the construction and automotive industries, our Healthcare sales are now impacted as well. We expect no material change to this situation in Q2.

As a consequence of the early action we took in 2008, the reduction of our fixed cost base has progressed well in Q1 and is now expected to exceed EUR 500 million on an annualized basis by the end of this year, with a further acceleration of restructuring in Q2, especially at Lighting.

At the same time we have continued to execute our strategy to further build leadership in Health and Well-being, maintaining investments in R&D, marketing and small acquisitions while divesting the remaining part of our holding in LG Display. We will continue to invest in our future, while dynamically managing our cost base in line with revenue and giving high priority to cash flow and strong liquidity.

We remain convinced that Philips will come out of this recession as a stronger company. The portfolio of leading businesses we have built up is clearly not immune to the market woes we are now experiencing, but it is certainly more resilient than the portfolio we operated in the previous downturn. In addition, our strong balance sheet, including our solid cash position, and our ability to adjust our management priorities in line with the dynamics of external circumstances give me confidence in the future prospects of Philips."

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About Royal Philips Electronics
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a diversified Health and Well-being company, focused on improving people’s lives through timely innovations. As a world leader in healthcare, lifestyle and lighting, Philips integrates technologies and design into people-centric solutions, based on fundamental customer insights and the brand promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately 116,000 employees in more than 60 countries worldwide. With sales of EUR 26 billion in 2008, the company is a market leader in cardiac care, acute care and home healthcare, energy efficient lighting solutions and new lighting applications, as well as lifestyle products for personal well-being and pleasure with strong leadership positions in flat TV, male shaving and grooming, portable entertainment and oral healthcare. News from Philips is located at www.philips.com/newscenter.

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