Philips core profit drops

Philips Electronics reported a bigger-than-expected 28 per cent drop in quarterly core profit yesterday, as its television business sank deeper into the red, and warned it expected some developed economies to slow.

The Dutch electric razors-to-lightbulbs group said first-quarter earnings before interest, tax and amortisation fell to €265 million - down from €370 million the year before and compared with an average of €306 million 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 license income and some acquisition-related charges," chief executive officer Gerard Kleisterlee said in a statement.

The company's TV business is suffering from tough competition, especially in the US, from low-cost rivals such as Taiwanese Amtran's Vizio brand. 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 told reporters on a conference call, without elaborating.

"In the short term the TV business continues to be more negative than expected, but Philips has already announced measures for this business, which we expect to positively impact results from the end of this year," SNS Securities analysts said.