By Harro ten Wolde
AMSTERDAM (Reuters) - Dutch conglomerate Philips posted sharply lower third-quarter core profit that missed forecasts, partly hurt by its normally resilient healthcare unit as orders in the United States slowed due to the credit crisis.
Shares of Philips, whose health care unit is one of the world's top three hospital equipment makers, fell more than 7 percent at one point, underperforming a sharply higher market.
"In the United States there is a higher dependence on capital markets for hospitals for their financing," Chief Financial Officer Pierre-Jean Sivignon said. "With the financial crisis continuing we have no idea how long this situation will persist."
Sivignon said the healthcare unit had seen an order slowdown in the past weeks, mainly in the United States. "We saw a little bit of push-backs in orders from the third quarter to the fourth quarter," he said.
Philips' earnings before interest, tax and amortization (EBITA) fell 71 percent to 128 million euros ($175.7 million), hit also by a previously announced charge for asbestos claims and restructuring costs. The average forecast of eight analysts in a Reuters survey was 168 million euros.
The healthcare unit's EBITA rose to 197 million euros from 188 million, helped by a 45 million one-off gain, but missed analysts' expectations.
"Health was always considered to be stable. Now with orders being pushed back in the United States due to the financial crisis, the question is how long will this last and will it happen in Europe too," Rabo Securities analyst Frits de Vries said.
ING analyst Marcel Achterberg said the healthcare unit, which competes with GE Healthcare and Siemens, had posted a sharp drop in underlying profitability in the third quarter, below his "already conservative" estimate.
Philips shares were down 5.3 percent at 14.95 euros by 5:23 a.m. EDT, underperforming a 6.4 percent higher DJ Stoxx 50 index. It was one of only two decliners in the index.
BUYBACK
Philips said it would slow its 5 billion euro share buyback program, of which 3 billion was completed.
"For any company, cash is king in today's world," Sivignon told reporters.
He said the decision to slow buyback program -- which may not be completed next year as planned -- was a matter of prudence, but it could leave room for takeover opportunities as prices looked set to fall.
Analysts said Philips' consumer unit, which the company has restructured to turn around a loss-making television business, held up well in the third quarter despite softening consumer demand in mature markets.
Profit at the consumer unit fell 44 percent to 95 million euros, just above the average analyst expectation.
Philips' consumer business generates the bulk of revenue in North America and Europe from products ranging from MP3 players and digital photo frames to water kettles, toasters and shavers.
Group net profit rose 8 percent as the asbestos charge was offset by a 302 million euro book gain from the sale of Philips' remaining stake in Taiwan Semiconductor Manufacturing Company TSMC.
Philips said it expected up to 230 million euros in restructuring charges in the fourth quarter.
(Reporting by Harro ten Wolde; Editing by Sue Thomas)
