Royal Philips Electronics NV, Europe’s largest maker of consumer electronics, said it wouldn’t meet its goal of doubling earnings per share by 2010 because the weakening economy was hurting demand for consumer and automotive products.
Philips will also write down its stakes in LG Display Co, the world’s second-largest maker of liquid-crystal displays, and NXP BV, Europe’s third-biggest maker of semiconductors, by 1.1 billion euros (US$1.39 billion) this quarter to account for their falling market values.
“The speed and ferocity by which the weakening economy is affecting demand in key markets is now also taking its toll on the financial performance of Philips,” chief executive officer Gerard Kleisterlee said in a statement. “The downturn we see now is without recent comparison and is developing much faster and deeper than expected.”
In April, Philips said earnings before interest, tax and amortization should rise to 10 percent to 11 percent of sales by 2010. Last year, Amsterdam-based Philips had an operating profit margin on that basis of 7.7 percent. Philips had said it hoped to double Ebita per share by 2010.
Measures to reduce costs and protect margins will probably result in additional charges of about 110 million euros in the fourth quarter, increasing the total to as much as 340 million euros, Philips said.
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