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Amsterdam: Philips Electronics reported a bigger-than-expected 28 per cent drop in quarterly core profit on Monday, as its television business sank deeper into the red, and warned of slowing economic growth in mature markets.
The Dutch maker of lightbulbs, X-ray machines and electric toothbrushes saw its shares fall as much as 3.7 per cent, extending losses on Friday sparked by an unexpected profit drop at US rival General Electric.
First-quarter earnings before interest, tax and amortisation (EBITA) fell to 265 million euros ($419 million) - down from 370 million the year before and compared with an average of 306 million euros in a Reuters poll of 14 analysts.
"Our results are clouded, more than we like, by the adverse situation in our TV business, significantly lower incidental licence income and some acquisition-related charges," Philips chief executive Gerard Kleisterlee said in a statement.
The company's TV business is suffering from tough competition, especially in the United States, from low-cost rivals such as Taiwanese Amtran's Vizio brand, but it was also loss-making in Europe in the quarter.
Philips said it expected "some mature economies" to soften in the wake of a global credit crisis.
"It is a situation we are watching, the economy, and if there are things to be done we would do them without wasting time," chief financial officer Pierre-Jean Sivignon said.
Philips may scale back its branding campaign or trim some research and development spending, he said.
Philips shares were down 3.3 per cent at 23.11 euros by 1016 GMT after earlier touching a low of 23.02 euros, underperforming the DJ Stoxx 50 index, which was down 0.8 per cent.
First-quarter revenue was nearly flat, at 5.963 billion euros, compared with 5.93 billion a year earlier and in line with analysts' average forecasts for 5.997 billion euros.
The Amsterdam-based firm confirmed its target for annual comparable sales growth of at least six per cent from 2008 to 2010 and raised its 2010 EBITA margin target to 10 to 11 per cent. It had previously forecast more than 10 per cent.
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