The ratings on Netherlands-based diversified technology group Koninklijke Philips Electronics N.V. (Philips) reflect its global reach and wide product diversity, combined with a strong brand name and several world-leading market positions in relatively stable cash-generative businesses such as medical systems, lighting, domestic appliances, and personal care. These strengths are offset by Philips' exposure to the cyclical and competitive consumer electronics sector, although the group is reducing this exposure. The ratings are also constrained by variable operating environments in certain divisions, product segments, and geographic markets, due to the weak global economy and intense competition. Philips' operating performance has been deteriorating since the second half of 2008 due to difficult economic conditions. The global economic slowdown has adversely affected all segments.
