Philips shares drop 11% on shock profit warning

Philips light bulbs Philips is the world's leading manufacturer of lighting

The Dutch lighting and consumer electronics giant Philips said falling demand in western Europe would hit second-quarter profits.

Shares were 11% lower in early afternoon trading.

Philips, which is the world's biggest maker of lighting, said sales growth would be in low digits and profit margins would shrink.

It said operating earnings would be about half the previous quarter's 193m euros ($280m, £172m).

Philips said weak demand and falling licensing income were problems.

Other costs included those incurred in setting up a joint venture for its struggling television division, which had been a long-term drag on its finances.

China's TPV, which makes desktop and TV monitors, took 70% of the joint venture.

Philips said it would cut costs and take other unspecified measures in response.

The company's full-year earnings report is due out on 18 July.

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