Philips boss Frans van Houten says 2014 is still a challenging year despite an upbeat set of second-quarter results, in the group's third guidance in recent months. David Pollard reports.
Philips expects core profit to rise in the second half - thanks to cost cuts. But it's a challenging year for the Dutch group - and will likely remain so. CEO Frans van Houten. SOUNDBITE (English) Frans van Houten, Chief Executive, Philips Chief Executive, saying: ''Unfortunately, that is still the case. So the total year results will be lower than last year. What we do flag, however, is that operationally, the second half year profitability will be better than last year. So we are making progress as we fight headwinds such as currency and slowdowns in China and the United States but these headwinds will not deter us.'' Last month, Philips announced plans to spin off its lighting components manufacturing business. Instead, it wants to concentrate on providing higher-value lighting and medical systems. SOUNDBITE (English) Frans van Houten, Chief Executive, Philips Chief Executive , saying: ''We believe that there are so many opportunities in the healthcare market and by speeding up the innovations, bringing them faster to the market, by improving efficiency, I think we can become more competitive even, and do more deals like the Karolinska deal in Solna, Sweden, where we inked a great contract in the second quarter for a 15-year agreement. That's what I'd like to see..'' It's the third such outlook from Philips in as many months. In April, van Houten said improving the overall result in 2014 would be difficult. Another cloud on the horizon: Ukraine - and the prospect of more sanctions on a major market for Philips, Russia. SOUNDBITE (English) Frans van Houten, Chief Executive, Philips Chief Executive , saying: ''We have been in Russia for about 120 years and we have many employees there that are also dependent on healthcare equipment, we have many patients there who are reliant on healthcare equipment from Philips, so it is a very difficult situation indeed.'' Second-quarter results were relatively healthy. Profits above forecasts at 415 million euros, that's above forecasts, on sales of 5.3 billion.