Dutch consumer electronics firm, Philips, has reported a net loss of €1.35 million in the second quarter of this year, due to lower operating earnings and a loss in discontinued operations.

In the second quarter last year, the company’s net income stood at €262 million, a company statement said.

Sales during the quarter fell by 2.43 per cent to €5.21 million from €5.34 million in the year-ago period.

“Our second quarter results were impacted by near-term operational challenges, weaker markets and a significant impairment charge. We are taking necessary steps to improve performance and we are confident in the prospects of our portfolio,” Royal Philips Electronics President and CEO, Mr Frans van Houten, said.

In order to speed up growth, the company has implemented a €500-million cost reduction, which is effective to be margin accretive from 2013 onwards.

Besides, the company said it would buy back shares worth €2 billion, a move which is likely to address the efficiency of the company’s balance sheet.

“We do not expect a material performance improvement in the near term as operational risks and issues remain and also considering the current uncertain economic environment,” Mr Houten said.

On a comparable basis, sales grew 4 per cent, with “solid mid-single-digit growth” in Latin America and India, while the mature markets saw low-single-digit growth, the company said.

The number of employees increased by 1,103 in the quarter, which can be largely attributed to the Preethi acquisition in consumer lifestyle and an increase in temporary headcount.

During the first six months of this year, Philips completed four acquisitions including India-based kitchen appliances business of Preethi and Optimum Lighting.

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