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Philips posts record loss on write-downs

Philips Electronics has reported a large fourth-quarter net loss and a record annual loss, with write-downs on stakes in IT-related companies weighing heavily on its results.

Europe's largest consumer electronics maker said net loss for the fourth quarter amounted to €1.53bn (£1bn) as of 31 December, compared with a €1.06bn loss for the the same period the previous year.

Philips took charges of €1.34bn to account for the decrease in value of its holdings in other companies. Of that charge, €921m relates to French IT services company Atos Origin and €275m for LG Philips Displays, a cathode ray tube display joint venture with South Korea's LG Electronics.

Excluding charges, the last three months of 2002 brought a profit of €58m, against a loss of €103m a year ago. Charges in the fourth quarter of 2001 included a €526m write-down, mainly for Philips' stake in Vivendi Universal and other charges totalling €433m, Philips said.

Revenue in the fourth quarter dipped 4% to €8.92bn, from €9.26bn in the final three months of 2001. The weak dollar had a 7%negative impact on sales, which grew 12% in unit terms.

Sales in the Americas declined, but showed a small rise in Europe and were strong in the Asia Pacific region.

For the full year 2002, Philips posted a record net loss of €3.21bn, surpassing its previous record net loss of €2.48bn in 2001. This contrasted sharply with the €9.66bn net profit Philips recorded in 2000.

With financial markets around the world declining, Philips was forced to take charges of €3.26bn in 2002 to revalue its assets. The biggest charge, at €1.86bn, was for its holding in Vivendi. Excluding all special items, net profit for 2002 would have been €208m.

Philips is streamlining its business and cutting costs where it can to return to profit. The company reduced overhead costs by €25m last year and plans to achieve a total of €1bn in cost reductions. Philips is also selling noncore activities which, the company hoped, would bring in €1bn.


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