Philips profit falls on strong euro, slowing demand in China and Russia

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Philips’ shares tumbled on Tuesday after the healthcare, lighting and consumer appliances maker reported a bigger-than-expected fall in quarterly operating profit.

It warned this year will be challenging, with slowing demand for medical equipment in China along with weakness in construction there hitting its lighting business.

Philips also said medical equipment sales in Russia had declined and flagged up worries about the effects of the Ukraine conflict.

The strong euro was another factor in a 22 percent drop in earnings before interest and tax and amortisation (EBITA) in the three months up to the end of March. It was 314 million euros as group sales fell 4.5 percent.

Chief Executive Frans van Houten said he was still confident that Philips would hit its operating profit margin target of 11-12 percent by 2016, though progress this year towards that goal would be hard.

“We have modified (our outlook) by saying it’s a challenging year and thereby implying that an improvement this year will be difficult,” he told journalists during a conference call.

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