By Robin van Daalen and Ed Ballard
AMSTERDAM--Royal Philips NV has warned shareholders that
continuing problems at the U.S. factory where it makes medical
scanners has knocked fourth-quarter profit lower than previously
expected.
Production at the facility in Cleveland, Ohio, was suspended
early in 2014 after the Food and Drug Administration raised
concerns about its manufacturing controls.
Since then, Philips has struggled to restart the facility, which
has led to a series of profit warnings. Chief Executive Frans van
Houten has taken responsibility for Philips's health-care unit
after the departure of its chief executive last year.
The Dutch electronics maker, whose products range from shavers
and coffee machines to hospital scanners, said on Tuesday that it
expects a EUR225 million ($266 million) hit for the year to
end-December from the delay at the plant in Cleveland, up from a
previous estimate of EUR180 million.
"Although these delays have impacted our broader health-care
performance, we are very pleased to now build further momentum in
delivering strong imaging innovations to our customers," said Mr.
van Houten.
Philips said it has resumed shipping its Brilliance iCT product
from the facility in Cleveland following external certification of
its quality-management system.
Philips's health-care business, which competes with General
Electric Co (GE) and Siemens AG (SIE. XE) in the hospitalscanner
market, generated EUR9.58 billion in revenue in 2013, around 41% of
total sales.
The company said earnings before interest, taxes, and
amortization totaled EUR255 million in the fourth quarter, sharply
down from the same period the previous year when Philips reported
Ebita of EUR884 million.
Philips said the decline reflected unfavorable shifts in
currency rates in emerging markets, weak demand in some markets, as
well as the problems at the Cleveland plant. Philips is scheduled
to release its full-year earnings report on Jan. 27.
The profit warning comes as the Amsterdam-based company is
working to merge its health-care and consumer-electronics divisions
into a single company, which will remain the core of Philips's
business. At the same time, it plans to hive off its lighting
business, and possibly spin that division off in an initial public
offering as early as 2016.
Write to Robin van Daalen at Robin.VanDaalen@wsj.com and Ed
Ballard at ed.ballard@wsj.com
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