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Philips core profit down, to slow share buyback

Dutch company Philips Electronics posted a 71% fall in third-quarter core profit as a charge for asbestos claims and restructuring costs impacted the group result.

Earnings before interest, tax and amortization (EBITA) were €128 million ($175.7 million), compared with the average analyst expectation of €168 million in a Reuters survey of eight analysts.

“Given the limited visibility the current economic environment brings, we have taken a number of actions to safeguard profitability,” Philips Chief Executive Gerard Kleisterlee said in a statement.

Philips said it expected up to €230 million in restructuring charges in the fourth quarter.

Philips' consumer business is feeling the impact of slowing economies, particularly in North America and Europe, where it generates the bulk of revenue from products ranging from MP3 players and digital photo frames to water kettles, toasters and shavers.

The unit's profit fell 44% to €95 million, while the average analyst expectation was €91 million.

Philips said it had completed €3.1 billion of its €5 billion share buyback and that it would slow down the completion of the program due to the economy.

Group net profit rose 8% as a €241 million charge for future asbestos claims in the United States was offset by a €302 million book gain from the sale of Philips remaining stake in Taiwan Semiconductor Manufacturing Company. (Reuters)