Philips CE Segment Sales Off 2%

By Jeff Malester -- TWICE, 7/25/2005

Amsterdam, The Netherlands — Strong sales in North America, aided by a favorable performance in flat-panel televisions, helped the consumer electronics business at Philips Electronics register $2.72 billion in sales during the second quarter.

However, while both connected displays and home entertainment networks posted comparable growth throughout Philips' business reach, a decline in sales of licenses reduced CE segment sales 2 percent in the second three months, compared with $2.75 billion in the same period in 2004.

Income from operations for home entertainment networks and lower restructuring charges boosted overall CE segment income from operations to $74.6 million in the second quarter, ended June 30, up from $63.8 million year-on-year.

CE sales helped drive up overall second-quarter revenue in North America by 4 percent, rising to $2.22 billion in the period, compared with $2.20 billion in the same quarter a year earlier.

Philips reported that its CE business remains on track to achieve a 4 percent to 4.5 percent profitability target by the end of 2005. Supporting this expectation is a six-month CE segment sales increase, to $5.3 billion, up from $5.2 billion in the same period last year. Income from operations for the segment declined during the first half, to $130 million from a year-ago $134.8 million.

First-half sales in the United States overall climbed to $4.01 billion, said Philips, up from $3.92 billion in the first six months the prior year.

Consolidated Philips sales in the second quarter slipped 3 percent, down to $8.5 billion, compared with a year-earlier $8.8 billion, due, in part, to lower sales of LG.PhilipsLCD, the combined flat-panel TV-making venture with South Korea-based LG Electronics.

However, consolidated net income in the three months rose to $1.2 million, compared with $741.5 million in the same three months in 2004, due entirely to the sale of the remaining 30 million shares of common stock of navigations systems company Navteq, which yielded a non-taxable gain of $906.4 million.