February 2, 2018 / 7:14 AM / 6 months ago

UPDATE 1-Philips Lighting Q4 earnings beat estimates on cost cutting

(Updates with details, CEO quote)

AMSTERDAM, Feb 2 (Reuters) - Philips Lighting, the world’s largest maker of lights, reported better-than-expected fourth-quarter core earnings on Friday, underpinned by cost cutting and lower research and development expenses.

Adjusted earnings before interest, taxes, and amortisation (EBITA) came in at 207 million euros ($259 million), the company said, compared with 188 million euros a year ago.

Analysts polled for Reuters had seen EBITA at 198 million euros.

The company’s comparable sales were in line with expectations, up 3 percent at 1.98 billion euros.

“The firm’s professional lighting business, which grew EBITA to 87 million euros from 46 million euros a year ago, was benefiting from growth in most regions,” CEO Eric Rondolat said.

In an outlook, Philips Lighting said it would target positive full-year sales growth, along with EBITA margins of 10 percent-10.5 percent.

In the fourth quarter, traditionally the company’s strongest, comparable sales grew 3 percent to 1.89 billion euros at a margin of 10.9 percent.

Philips Lighting, which was spun out of Philips in 2016, said it would continue cutting costs and expected to benefit mostly in the second half of 2018 with “a soft start in the first quarter.”

While most geographies are expanding, the lights manufacturer continues to suffer from difficult market conditions in the Middle East, notably Saudi Arabia, the company said.

The company’s free cash flow would remain positive but decline from 403 million euros in 2017, due to higher restructuring payments.

In the United States, where the company competes with Acuity Brands Rondolat said, “we are not losing market share.”

$1 = 0.8003 euros Reporting by Toby Sterling; Editing by Sherry Jacob-Phillips

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