Philips Electronics' second-quarter operating profit more than halved as it struggled with sluggish demand for electronics goods and overcapacity of chips.
Operating profit fell to €147 million ($177.7 million) from €356 million in the year-earlier quarter, the company said today.
Philips, the world's biggest lighting maker and a top-three maker of hospital equipment, had warned last month that weak consumer retail spending in Europe was hurting sales at its consumer electronics and domestic appliances units.
"Weakness in the technology sector continued to hamper our results," chief executive Gerard Kleisterlee said in a statement. "We remain cautious as regards the business outlook for the immediate future. In many parts of the world, growth is slowing down. In Europe in particular, the consumer retail environment
Net profit rose to €983 million from €616 million, compared with a forecast of €884 million including exceptionals. Net profit was boosted by a one-off gain of €753 million from the sale of Navteq shares.
Revenues fell almost 3 per cent to €7.087 billion.
Consumer Electronics remained on track to achieve its target for 4 to 4.5 per cent operating margin by the end of 2005, Philips said, adding it did not expect a significant upturn in the semiconductor market and forecast a mid-single-digit sequential sales increase in the third quarter.