Philips Announced Spinoff on Track but Posts Loss

Philips the conglomerate based in the Netherlands said it was moving ahead with the spinoff planned for its lighting business even though it experienced a loss during the recently ended third quarter, when hit by weakness in China and Russia and a number of charges that were one-off.

On Monday, placing blame on less demand in key markets of growth, Philips warned that its adjusted earnings for the second half prior to tax, interest as well as amortization would be just below last year.

However, the company said it expected there would be improvements during 2015 and was still committed to its 2016 targets.

The company will also stick with its plan for the spinoff it announced in September as it looks to expand its consumer and healthcare division, which are higher margin.

The conditions in the market do not have a direct affect on us with regard to our spin off, said Frans van Houten the Philips CEO.

During the just ended third quarter, the company had a net loss of $131 million or 103 million euros with sales of more than 5.5 billion euros. That compared to a 281 million euro net profit with 5.6 billion euros in sales last year during the same period.

Philips was also hit with several charges that were one-off including a charge of 366 million euros for a lawsuit lost over a patent against Masimo a manufacturer of medical equipment, which is being appealed by Philips.

In addition, there were write downs of 49 million euros in inventory following a suspension of production at a factory in Cleveland, Ohio.

Share of Philips were down early Monday in European trading by 4% thanks to the warnings for the remainder of 2014 and a weak bottom line.

Philips, for decades was the consumer electronics leader but has reinvented itself over the last few years, as it sold of its television business, which was lower-margin, in 2012.

It is now ready to take the big step of splitting into two with its lighting business upon which the company was first found over 123 year ago, splitting away from his healthcare business.

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