UPDATE 3-Philips says H2 sales growth to slow, shares down

* Q2 net profit 262 mln euros vs 241 expected in poll

* Sees H2 sales growth slowing to mid-single-digit rate

* Confident to exceed 10 pct adjusted EBITA target in 2010

* Shares down as much as 4.3 pct, biggest Dutch decliner

(Adds detail, background, updates shares)

By Harro ten Wolde

AMSTERDAM, July 19 (BestGrowthStock) – Dutch electronics group
Philips (PHG.AS: ) forecast sales growth would slow in the second
half of this year given sluggish U.S. and European economies and
as television sales drop off after the soccer World Cup.

The outlook offset higher-than-expected quarterly results
and brisk trade in markets like China and Brazil, helping push
its shares down as much as 4.3 percent on Monday.

Europe’s biggest consumer electronics maker said it expected
sales to slow in the second half to mid-single-digit levels from
a 12 percent comparable growth in the first half amid “continued
but slow” recovery in the United States and Europe.

Emerging markets — whose share of global sales has risen to
34 percent from 29 percent last year — were driving
double-digit growth in Brazil, China, Russia and India, mainly
in its Lighting and Consumer Lifestyle units.

Its shares touched a 12-day low and were off 3.3 percent at
24.09 euros by 0956 GMT, the biggest decliners in Amsterdam’s
easier AEX index (.AEX: ).

The maker of MP3 players, MRI scanners, toasters and shavers
posted second-quarter earnings before interest, taxes and
amortisation (EBITA) of 527 million euros ($684 million) versus
analysts’ average forecast of 486 million.

Sales of 6.2 billion euros and net profit at 262 million
euros also came in above forecast. [ID:nWEA9936]

SNS Securities analyst Victor Bareno said the results did
not provide “the huge upside that Philips reported in earlier
quarters”.

LOWER GROWTH MAGNITUDE

Analysts had warned ahead of the results that investor
expectations for Philips may have been too high.

“The magnitude of the beat compared to the previous five
quarters is somewhat lower,” ING analyst Jan Hein de Vroe said.

Eleven out of 13 analysts tracked by Thomson Reuters
StarMine SmartEstinates had downgraded net profit estimates in
the past 30 days by an average of 22.6 percent, while the shares
had gained almost 7 percent. [ID:nLDE66D12]

StarMine predicts future earnings by putting more weight on
recent forecasts of top-rated analysts.

Philips has aggressively cut costs even as a nascent
economic recovery took hold, helping it to squeeze out earnings
in a difficult environment.

As a result Philips may exceed its 10 percent margin target
this year for earnings before interest, taxes and amortisation
(EBITA), excluding extraordinary items.

The top three hospital equipment maker, which competes
against the healthcare and lighting units of General Electric
(GE.N: ) and Germany’s Siemens (SIEGn.DE: ), also expects to exceed
its target for structural cost savings in 2010 of 700 million
euros.
(Editing by Michael Shields)
($1=.7706 Euro)

UPDATE 3-Philips says H2 sales growth to slow, shares down