Philips Q3 profit falls, despite higher revenues

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Philips’ orders being pushed back in the United States due to the financial crisis. Image Source: Philips  

Philips Healthcare reported a 5 percent increase in sales in its 2008 third quarter, however, it posted sharply lower third-quarter profit that missed forecasts, which the company said is partly due to the credit crisis in the United States.

For the quarter, which ended Sept. 30, Philips reported sales of €1.8 billion ($2.46 billion U.S.), compared to €1.6 billion ($2.19 billion U.S.) in the same quarter last year. The Andover, Mass.-based company said it was a 5 percent increase before considering a negative currency impact.

Earnings before interest, tax and amortization (EBITA) rose to €197 million ($270 million U.S.) for the 2008 third quarter, compared €188 million ($258 million U.S.), boosted by a €45 million ($62 million U.S.) one-off gain on the sale of Philips Speech Recognition Systems.

Excluding this gain, EBITA amounted to €152 million ($209 million U.S.), impacted by acquisition-related charges of €17 million ($23 million U.S.), mainly at Imaging Systems, reported Philips. However, earnings were down from €169 million ($232 million U.S.) in the 2007 third quarter.

"Health was always considered to be stable. Now with orders being pushed back in the United States due to the financial crisis, the question is how long will this last and will it happen in Europe too," said Rabo Securities analyst Frits de Vries, reported Reuters.

Philips said that it will accelerate initiatives to “improve margins and to further optimize operation's structure, particularly in Imaging Systems.” These efforts are expected to lead to charges of approximately €50 million ($69 million U.S.) in the fourth quarter.