Philips Shows Q3 CE Profitability, But Sales Decrease 16% To $2.1B
By Jeff Malester -- TWICE, 10/28/2002
AMSTERDAM, THE NETHERLANDS — Given a lift by increased television, audio and VCR revenue, third quarter income from operations in the consumer electronics segment at Dutch electronics giant Royal Philips moved to the positive side of the ledger. The segment's operating profit for the three months hit $23.7 million, compared with an operating loss of $44.4 million in the year-ago period.
However, sales in the consumer electronics segment dropped 16 percent in the third quarter, down to $2.1 billion, compared with $2.6 billion in the same period last year.
In North America, Philips reported that third quarter CE income had improved over the second three months, where the loss of $18.8 million was more than halved from the same three months last year.
Mainstream CE product sales dipped to $2 billion in the third quarter, ended Sept. 30, down from $2.3 billion in the third quarter of last year. Income from operations in mainstream CE products hit $8.9 million in the third quarter, compared with a loss of $103.7 million in the third quarter of 2001.
For the nine months, sales of mainstream CE products dipped to $6.3 billion, down from $7 billion in the same period in 2001. However, mainstream CE products turned a $635.8 million loss from operations in the first nine months of last year into $14.8 million in operational income in the same period this year.
Philips is on target to report positive operating profit and net income, excluding special items, for the year, despite the difficult circumstances in the market, according to Gerard Kleisterlee, president/CEO.
Responding to this positive outlook, especially with cost cutting, Philips posted a smaller third quarter net loss of $325.8 million, including a charge related to its investment in media group Vivendi Universal, compared with a net loss of $726.6 million in the third quarter of 2001. Philips sales climbed 2 percent in the third quarter, to $7.2 billion, up from $7.1 billion year-on-year.
For the nine months, sales decreased 1 percent, to $22.6 billion, from $22.8 billion in the same nine months last year. Net loss for the nine months climbed to $1.7 billion, compared with $1.4 billion in a similar period last year.
Looking ahead, Philips expects the fourth quarter to show the usual seasonal improvement, reflected in virtually all sectors and in its bottom line. The company said it will continue to focus on cost reduction and build on the progress it has made in its supply chain, among others.
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