Philips Posts 54% Drop In Q2 Net

By Greg Tarr -- TWICE, 7/21/2008

AMSTERDAM, THE NETHERLANDS — Royal Philips Electronics NV reported that its second-quarter net income dropped 54 percent to $1.14 billion from $2.5 billion a year earlier.

The figure included a $1.2 billion gain from selling off its Taiwan Semiconductor Manufacturing stake, and a $476 million impairment charge for NXP Semiconductors, the chip maker now controlled by private equity groups including Kohlberg Kravis Roberts.

Philips said sales rose 7.1 percent to $10.2 billion. Earnings before interest, tax and amortization (EBITA) rose 7 percent to $658 million.

Philips has received more than $19 billion in divestments since 2005, as investments in its medical and lighting units were increased by some $16 billion.

Operating profit from the television business rose higher than estimates, although Philips has decided to license off the TV sales and marketing operations in the United States and Canada. Results from that change won't be seen until the third quarter, Philips said.

TV sales were said to have increased in Central and South America.

EBITA at the consumer lifestyle unit, which makes consumer electronics personal care appliances, fell to $132 million in the quarter from $169 million a year earlier. Television sales rose 8 percent to $2.2 billion.

Philips showed $105 million in restructuring charges in the period, coming largely from its television operations. The company also posted an $89 million gain on the sale of its set-top box operations to Pace Micro Technology.

Sales from lighting rose 19 percent to $2.8 billion, and were helped by the acquisition of Genlyte Group.

Health-care EBITA declined 11 percent to almost $311 million, and the company forecasts the unit to see stronger sales and margin performance in the second half of the year.