Keeping down costs

The chief executive of Philips has warned that the company will not shirk from implementing further cost-cutting measures in light of today’s modest second quarter results.

The company reported an improved EBITA margin before €148m (£128m) restructuring charges compared with quarter 1 in all business sectors.

Overall sales were down 19 per cent year-on-year, which Philips attributed to continuing weaknesses in consumer and professional markets. Healthcare sales showed a year-on-year decline but also an increase compared with quarter 1, supported by modest growth outside the US.

Ongoing asset management leaves the company with a strong free cash flow of €251m.

Gerard Kleisterlee, president and chief executive of Royal Philips Electronics, said: ‘In line with earlier guidance, we did not see a material improvement in consumer or professional markets in the past three months. However, while the pressure on our top line persisted, we are reporting a positive net income and improved underlying profitability over the quarter.