Philips, Europe’s biggest television maker, said today it will slow its current €5 billion (£3.9 billion) share buy-back programme as reduced consumer demand hit third quarter sales.

Group sales fell 2 per cent in the third quarter to €6.33 billion, missing analysts estimates. Mature markets were particularly badly hit, with sales in Western Europe dropping 9 per cent compared with the same period last year. Emerging markets helped buck the trend with a sales increase of 6 per cent.

The shavers to televisions consumer electronics giant gave a cautious outlook for the fourth quarter, citing “limited visibility” in the current economic climate.

Shares in the group fell more than 8 per cent, underperforming a sharply higher market.

Pierre-Jean Sivignon, the group’s chief financial officer, told reporters in a conference call this morning that the company is slowing its share buyback scheme to retain flexibility.

“For any company, cash is king in today's world,” he said.

So far Philips has completed €3.1 billion of its €5 billion share buyback scheme.

Sales in the group’s consumer business, which the company has restructured in an attempt to turn around its loss-making television business, fell by 8 per cent, compared with the third quarter last year. The Amsterdam-based group said growth in its Health & Wellness and Domestic Appliances units were more than offset by lower sales at the other consumer lifestyle businesses, in particular television.

Mr Sivignon told reporters the company’s health unit, which competes with Siemens and GE Healthcare, had seen a slowdown in orders, mainly in the US, in the last few weeks, which analysts highlighted as a worrying trend.

Frits de Vries, an analyst at Rabo Securities, said: “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?”

Net profit for the quarter rose 7.8 per cent, mainly as a result of a €302 million gain from the sale in August of its remaining stake in Taiwan Semiconductor Manufacturing Company, the microchip maker, helping to offset previously announced charges for asbestos claims and restructuring costs.

The group said it had taken a number of actions to safeguard profitability, including rigidly managing cost and prices and further shifting investments towards emerging markets and clear growth areas.

Philips added it expects up to €230 million in restructuring charges in the fourth quarter, but reiterated targets to more than double Ebita per share by 2010.

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