Philips stock hit hard as it warns on challenging 2014

Europe has bottomed out: Philips CEO

Shares in Philips took a hammering Tuesday morning after the Dutch electronics conglomerate reported a drop in its first-quarter results.

The company's share price was down 6 percent in early morning trade in Europe in spite of Philips' CEO Frans van Houten highlighting that demand on the continent was starting to pick up.

Net profit for Philips came in at 137 million euros ($189 million) for the first quarter of 2014, compared to a figure of 162 million in the first quarter of 2013. Revenues for the period came in at 5.02 billion euros.

Van Houten told CNBC Tuesday that he expected 2014 to be a "challenging year," but remained confident that the company would achieve its mid-term 2016 financial targets.

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In emerging markets, growth was disappointing for the company, which produces health care, consumer lifestyle and lighting products.

Chinese sales grew by just 5 percent over the first quarter, according to van Houten, who suggested the country had "slowed down," with less momentum in sales.

Restructuring costs also hit the firm, it said, as well as unfavorable exchange rates. A strong euro had weighed on earnings, the company noted, in addition to fluctuating currencies in many emerging markets.

But the picture looked more positive in Europe, with van Houten indicating that sales to its southern European markets had started to bounce back.

This comes after dwindling demand in the euro zone over recent years, as the region's sovereign debt crisis raged following the global financial crash of 2008.

"Europe, I think, is fully bottomed out," van Houten told CNBC Tuesday.

However, he added that northern European countries remained flat and were not yet getting in "second gear."

"It is a mixed picture," he said, reiterating that it would be a "challenging year ahead."