Europe's biggest consumer electronics and lighting company, Philips Electronics, has suffered a record loss, but promised investors a return to profit as early as this year.

The company lost 2.6bn euros (�1.6bn; $2.3bn) in 2001, a sharp turn-around from its 9.6bn euros profits in 2000.

The losses were larger than analysts' expectations. They had ignored Philips' own predictions of 600m euros losses and predicted that the losses would be 2.3bn.

Philips, which is also the world's third largest semiconductor maker, saw sales fall 15% during 2001 to 32.2bn euros.

Looking ahead, the company predicts further weakness, though the worst could be over in the IT and telecoms markets.

Chief executive Gerard Kleisterlee predicted a return to profit with a year.

"We're going to be in all kinds of black," Mr Kleisterlee said.

Wielding the axe

To further cut costs, Philips will also sell large chunks of its business.

"We have 27 businesses for sale that could realise over 1bn euros in the coming 18 months," said chief financial officer Jan Hommen.

"Improvements in results in 2002 will come mainly from cost reductions, efficiency improvements and restructuring programmes... as well as ongoing portfolio management," Philips said.