Philips CE Unit Posts Lower Sales, Higher Profit

By Steve Smith -- TWICE, 4/16/2007

Amsterdam, The Netherlands — Royal Philips Electronics consumer electronics operation, which markets the Philips brand in the United States, reported slightly lower sales but slightly higher profit for the first quarter, ended March 31.

In consumer electronics, of which 22 percent of its sales come from North America, first-quarter sales were $2.98 billion, down in comparable sales 6 percent from the previous year’s first-quarter sales of $3.3 billion. Profits were up slightly to $46 million from $44.6 million.

Philips said that last year’s first-quarter CE sales were helped by a sell-in of TVs due to the FIFA World Cup soccer tournament held later in the year; however, in this year’s first quarter, flat TV shipments were 50 percent higher than the previous year but they were offset by lower sales of monitors and CRT TVs.

Sales of mobile phones, “the divestment of which was completed at the end of March,” declined by $64.9 million compared with last year’s first quarter, Philips said.

Despite lower sales, Philips reported that the division’s profit increased slightly both in value and as a percentage of sales due to its entertainment solutions, home networks and peripherals and accessories operations.

Philips also reported that inventories decreased to 6.4 percent of sales, from the 8.4 percent in last year’s first quarter, as “strict inventory control remained a priority for categories such as flat TV.”

The company also said it anticipates little change in the consumer electronics market worldwide during the second quarter.