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Philips had a decline in profit and sales in the fourth quarter, as well as over the entire year of 2014 due to weak currencies and falling demand and disappointing sales in emerging markets like Russia and China, the Dutch electronics giant reported on Tuesday.
Impacted by restructuring costs and other items, earnings before interest, taxes and amortization (EBITA) was 262 million euros (296 million U.S. dollars) in the fourth quarter, compared to 789 million euros in the fourth quarter of 2013.
In addition, Philips posted a net income of 134 million euros in the last quarter of 2014, compared to 412 million for the same period the year before. Similarly, comparing sales between the fourth quarter of 2013 and 2014, sales declined by two percent to 6.536 billion euros.
Over the whole of 2014, EBITA, impacted by restructuring costs and other factors, amounted to 821 million, compared to 2.3 billion euros in 2013. Net income was 411 million euros, also considerably lower than the 1.2 billion euros of 2013. Comparable sales declined by one percent to 21.4 billion euros in 2014.
"Overall, 2014 was a setback in our performance trajectory," CEO Frans van Houten said in a press release.
"We have been taking clear actions to drive stronger operational performance across our businesses and expect sales growth and EBITA margin improvements in 2015 and beyond. However, looking ahead, we remain cautious regarding the macroeconomic outlook and expect ongoing volatility of some of our end-markets," he said.
He added that the company anticipated further incidental costs in 2015 and 2016, mainly in relation to restructuring and the separation in September of last year of two independent companies, one for lighting solutions and one combining health care and consumer lifestyle.
"Our transformation efforts continued to show good results, even as we addressed performance issues, ongoing softness in end-markets like China and Russia, and stronger-than-anticipated foreign exchange impacts, particularly in emerging markets."
The division of the Philips' company is still in progress and will take between a year and a year-and-a-half. Philips currently estimates the separation costs to be in the range of 300 to 400 million euros in 2015.
