Philips books Q1 losses on shrinking imaging sales in North America

Royal Philips Electronics has reported a 17 percent decline in revenues to €5.1 billion ($6.76 billion) for the first quarter, which the company partially attributed to slumping healthcare sales due to a "very soft U.S. hospital market." However, Philips also noted that while imaging sales are down, "performance in emerging markets and home healthcare solutions remains strong."

"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 automative industries, our healthcare sales are now impacted as well," said Gerard Kleisterlee, president and CEO of Royal Philips Electronics. "We expect no material change to this situation in Q2." Royal Philips booked a net loss for the 2009 first quarter of €59 million ($78.2 million), compared to net gains of €294 million ($389.99 million) in the first quarter of 2007.

Philips Healthcare reported that its equipment order intake declined by 17 percent on a currency-comparable basis year-on-year, with lower intake--partly for imaging systems--in both North America and the mature international markets.

The healthcare division said that earnings before the deduction of interest, tax and amortization (EBITA) declined to €75 million ($99.39 million), compared to year-ago earnings of €131 million ($173.69 million). The company noted that "strong growth in home healthcare solutions and customer services was more than offset by lower sales at imaging systems, patient monitoring and clinical care systems."

Geographically, the company said its sales growth was limited to emerging markets in Central and Eastern Europe, the Middle East and India. Philips Healthcare also noted that its EBITA was negatively impacted by lower volume in imaging systems, clinical care systems and healthcare informatics, combined with increased pricing pressure, particularly for imaging systems in North America. The division also noted that EBITA for the sector included acquisition-related charges of to €15 million ($19.89 million).

Royal Philips said that it expects the "healthcare market to remain weak, particularly in the United States." The company anticipates restructuring and acquisition-related charges of approximately €30 million in the second quarter, and further reduction of the cost base is to be expected going forward.