Philips Posts Higher Overall Net, But Lower CE Sales During Q2

By Steve Smith -- TWICE, 7/16/2007

Amsterdam, The Netherlands — Royal Philips Electronics saw increased profits and higher sales for the second quarter companywide, but slightly lower sales and higher profits in its CE operations worldwide.

During the quarter EBITA was $536.3 million, or 6.4 percent of sales, compared with $399.8 million or 4.5 percent of sales for last year’s second quarter.

Including a $1.68 billion gain on the sale of Taiwan Semiconductor Manufacturing Company (TSMC) shares, net income increased to $2.16 billion, from $415 million in the second quarter of 2006.

Philips said the reallocation of capital continued with the sale of a further stake in TSMC, additional share repurchases and the announcement or completion of several acquisitions, including Color Kinetics.

In consumer electronics EBITA for the second quarter was $28.9 million, up slightly from last year’s $27.6 million. Philips said CE’s EBITA was in line with 2006 and that entertainment solutions and home networks reported higher earnings in the quarter. Tight supply chain management limited the EBITA impact of a decline in sales at connected displays compared with 2006’s Q2, “a quarter which saw considerable sell –in ahead of the FIFA World Cup,” the company said.

CE sales were $2.96 billion off from the previous year’s $3.43 billion, an 11 percent decline, Philips said. Looking ahead, Philips said that new product introductions, sales in the second half are set to exceed the “weaker, post-World Cup sales in Q3 and Q4 of last year, underpinning the full-year EBITA target of 3 percent.”

Gerard Kleisterlee, president/CEO of Royal Philips Electronics, was pleased by the company’s performance overall. He noted, “It is encouraging to see that the increase in profitability we achieved was driven over a broad front –lower central costs and improved results in our higher margin businesses, based on their strong market positions.”