The ratings on The Netherlands-based diversified technology group Koninklijke Philips Electronics N.V. (Philips) reflect the group's global reach and wide product diversification, combined with a strong brand name and several world-leading positions; its strong positions in stable cash-generative businesses such as medical systems, lighting, domestic appliances, and personal care; and solid financial flexibility enhanced by substantial disposable listed financial assets. The ratings are constrained by Philips' volatile cash flow generation capacity during the upside of the business cycle; exposure to the cyclical consumer electronics sector and the cyclical and capital-intensive semiconductor sector (the profitability of both segments for Philips has not been sufficiently stable in recent years); and inconsistent operating performance in certain divisions and geographical markets due to macroeconomic
