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Electronics heavyweight Philips grew sales in the first quarter, but the cost of spinning off its main lighting arm was a heavy drag on profits.

Sales at the Dutch conglomerate rose 3 per cent year-on-year to €5.5bn but net income fell 63 per cent to €37m, a drop it attributed to costs – primarily tax charges – related to the separation of Philips Lighting for an eventual initial public offering. It estimated total costs from the separation could amount to as much as €225m.

The company stated that preparations for an IPO were continuing, but left open the possibility of accepting private offers:

With equity markets’ sentiment improving compared to the first couple of months of the year, an IPO increasingly appears a more likely outcome, subject to further market developments and other relevant circumstances.

However, the company has not yet concluded on all proposals in the private sale process and continues to assess the attractiveness of this route compared to the IPO, both in terms of value and conditions, while taking into account the best interests of Philips and its stakeholders.

Plans to sell lighting business Lumileds to Beijing-based private equity firm Go Scale Capital for $2.8bn would have helped ease the process along, but were scuttled by opposition from the US Committee on Foreign Investment.

Copyright The Financial Times Limited 2017. All rights reserved.

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