THE HAGUE: Dutch electronics giant Philips on Tuesday announced profits slashed by almost two-thirds after a "challenging" 2014, blamed on ever-slowing markets in China and Russia and unfavourable exchange rates.
Annual net profit tumbled from 1.17 billion euros in 2013 to 411 million euros ($462 million), the company said in a statement, after issuing a profit warning on January 13.
Sales in 2014 dropped 2.7 percent to 21.39 billion euros, said Philips, which has diversified into high-margin healthcare technology.
"The fourth quarter underscored a challenging 2014 for Philips," said CEO Frans van Houten.
The Amsterdam-based company said it expected results to improve in 2015, while remaining "cautious regarding the macroeconomic outlook and expect ongoing volatility of some of our end-markets."
Van Houten said the company, one of the world's leading makers of lighting, health care and consumer electronic goods, was now 1 percentage point behind on achieving its sales growth target in 2016.
"Overall, 2014 was a setback in our performance trajectory," Van Houten said.
Philips' share price briefly dropped 5 percent on the Amsterdam stock exchange's AEX index in early trading on Tuesday.
In December, a US jury ordered Philips to pay $466.8 million to American company Masimo for violating two medical device patents, with the Dutch company saying it would appeal.
Late last year Philips announced it would split in two in a historic but dramatic move to streamline the 120-year-old company.
Philips, a household name around the world for home appliances, has re-oriented its range of activities in recent years to focus more on advanced lighting technology and on medical technology where margins are strong and less vulnerable to competition from emerging markets.
The cost of splitting the business in two is estimated at 300-400 million euros in 2015, with the company saying it was in talks to sell its Lumileds and Automotive lighting businesses in the first half of this year.
The company employs about 105,000 people worldwide.
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