Flat screen and computer chip prices have come under pressure

Second-quarter sales were 7.09bn euros (�4.87bn; $8.54bn), and operating profits more than halved to 147m euros.

Net profit at the firm rose 60% to 983m euros, mainly due to the 753m euros sale of shares in map data firm Navteq.

Philips - which makes TVs, lighting equipment and medical systems - said it remained cautious about its outlook.

Slowing growth

The company had warned of a slowdown in retail spending last month.

Chief executive Gerard Kleisterlee said in a statement "in many parts of the world, growth is slowing down".

"In Europe in particular, the consumer retail environment is weak, impacting our growth ambitions in the short term," he added.

European sales dropped 6%, double the 3% drop in Philips' sales overall.

Last week, Philips' flat screen joint venture LG Philips announced a sharp drop in profits after prices of screens for TVs and computer monitors fell.