Philips dives into the red

EUROPE'S largest consumer electronics group, Philips, slumped to a record loss last year and warned there was no quick fix for the ailing company. The Dutch multinational posted a record e2.6bn (£1.59bn) loss in 2001 against a profit of e9.6bn the previous year. Sales slumped 15% to e32.3bn and chief executive Gerard Kleisterlee said there would be no rapid rebound in the company's fortunes.

Philips, which is cutting 12,000 jobs from its workforce of 188,000 to drive down costs, said the severe decline in demand for its products from the technology and telecommunications sectors had ceased but that 'economic conditions around the world continue to point to a limited growth environment'.

The annual loss includes e1.7bn of charges related to restructuring and a e526m writedown against its holdings in French media group Vivendi Universal and Danish technology company Great Nordic.

Philips' semiconductors, components and mobile phones businesses were savaged by the tech-sector slump last year but chip sales were up 5% in the last quarter of 2001 compared with the previous three months. Losses from operations were above expectations at e1.3bn. The shares fell at the open but rallied, rising 65 cents to e30.05.