Philips squeezed as customers start to budget

Philips, the lighting and electronics giant, today issued a profits warning after squeezed household spending budgets hit demand for its goods from toasters to electrical razors.

It reported "weaker-than-expected market conditions, especially in the consumer sector in western Europe" and set out plans to cut costs. Philips, headquartered in the Netherlands, admitted sales growth at its lighting division would be in low digits but its consumer electronics unit would see "low single-digit sales decline".

Philips said another drag was the cost of spinning off its loss-making TV division into a joint venture with Chinese television manufacturer TPV Technology, announced in April.