Philips Posts Profit With U.S. CE Unit
By Jeff Malester -- TWICE, 2/23/2004
EINDHOVEN, THE NETHER-LANDS — Royal Philips Electronics' U.S. consumer electronics operation reached the break-even point in the fourth quarter — recording a nominal $1.3 million profit — while the company said it is working toward full profitability for its CE business in the United States in 2004.
Fulfilling a promise to stop CE losses in the United States, Philips reported this upward trend helped overall company CE segment operating income to increase to $314.6 billion in 2003, up from $263.9 million the previous year. Higher licensing income also contributed to the rise, while the segment reported charges of $73.6 million in 2003, compared with $93.9 million the previous 12 months.
CE segment sales, however, dropped to $11.7 billion for the 12 months, down from $12.5 billion year-on-year.
Philips chief executive Gerard Kleisterlee said he expects the company's CE business to be able to achieve further annual savings of $507.5 million within two years. In the year's second half, Philips said 2 percent CE growth was driven mainly by flat-panel televisions and DVD.
For the 12 months, Philips said it exceeded its year's target of $1.3 billion in consolidated savings, with additional consolidated savings of $616.6 million for 2003.
Overall sales to North America dropped 19 percent in 2003, to $10 billion, from $12.4 billion, due mainly to a weaker U.S. dollar. On a comparable basis, sales climbed 5 percent. Philips reported a loss from operations of $521.4 million in North America in 2003, narrowing a $661 million North American loss from the previous year. Fourth quarter CE operating margin was 8.1 percent.
A recovering CE business helped Philips record consolidated net income of $758.7 million in the fourth quarter, compared with a loss of $1.9 billion in the same three months in 2002. A weakened U.S. dollar led to a 1 percent sales increase for the period, while the increase was 10 percent on a comparative basis.
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