Philips marketing rethink drives profit lift

Philips’ strategy to invest in local marketing that appeals to consumers emotions appears to have paid early dividends, as the company reported a sharp profit rise in its first quarter.

Philips Liam Gallagher ad
Philips featured Liam Gallagher in a campaign to promote its docking stations.

The Dutch group reported a dramatic 80% profit lift to €248m (£203m) in the three months to March, up from a loss of €160m (£131m) in the previous quarter, thanks to better than expected performances in its personal care, health and wellbeing and healthcare divisions. Sales rose 7% to €5.6bn (£4.6bn).

Frans van Houten, Philips chief executive, says: “I am encouraged by our results in the first quarter, which is a further step in the right direction for Philips.”

Van Houten added that the company still remains cautious about the remainder of 2012 because of uncertainties in the healthcare and construction markets and the slowing growth rate in the global economy.

Philips is aiming to achieve a 4 to 6% sales growth and profit margins of 10 to 12% by 2013. It plans to cut 4,500 jobs worldwide and make other cost savings across the business in order to reach these targets.

Philips told Marketing Week earlier this year that it had employed its first local marketing directors rather than trying to operate all communications centrally from The Netherlands, to help tailor campaigns to different territories and grow its consumer businesses.

It has also increased its investment in CRM, PR and digital as it looks to be recognised by consumers as the leading maker of health and wellbeing products such as shavers and toasters.