Europe's largest consumer electronics business could be heading for a loss in the third quarter, analysts warned yesterday, despite the fact that Philips, the Dutch technology company that operates the unit, said it would exceed its group-wide sales goal this year.

Sales from the division - which accounts for 30 per cent of Philips' revenues - rose 17 per cent as consumers swapped old-style TVs for flat-screen models. But the operating margin slipped from 2.7 per cent to 1.8 per cent as earnings slid from €62m ($78m) to €45m.