Amsterdam, The Netherlands - While Philips consumer electronics sales in North America climbed in 2002, worldwide CE sales dropped 13 percent and overall company sales edged downward 2 percent for the same period.
Philips reported that U.S. sales turned upward in 2002, with improvements in television, namely the extension of the flat TV product range and DVD, which took share from the VCR business. However, the monitor market suffered a severe price decline, especially in the second half of 2002. For the second consecutive year, the market for set-top boxes showed a decline - 33 percent in 2002, compared with 9 percent in 2001.
Despite double-digit growth of DVD players, including DVD+RW, sales in the consumer electronics sector at Philips Electronics decreased 13 percent globally in 2002, dropping to $10.4 billion for the 12 months, down from $12.1 billion the previous year.
Philips, which blamed a large part of the CE sales reduction to the shift of former CE activities to the company's miscellaneous sector, as well as the weaker U.S. dollar and price erosion, especially in the monitor market, did move into the black in its CE sector. The company reported global CE income from operations of $247 million in 2002, compared with a loss from operations of $697 million in the preceding 12 months.
Philips continued to improve overall performance this side of the Atlantic, including CE products, with sales in North America hitting $10.5 billion, up 5 percent from the $10 billion recorded in the year-ago 12 months. The company also was able to reduce its loss from operations in North America, down to $559.5 million in 2002, compared with a loss of $913.9 million in the same period the previous year.
Even with increased sales and smaller losses in the U.S. market, and a solid CE performance overall, Philips reported lower consolidated sales in 2002 and the largest net loss in its history. Dragged down by its semiconductor and components sectors, Philips recorded sales of $34.2 billion in the 12 months, down 2 percent from the $34.7 billion reported the previous year. Net loss soared to a whopping $3.4 billion in 2002, compared with a net loss of $2.7 billion in 2001.
On the brighter side, the company reported consolidated income from operations of $451 million in 2002, compared with a loss from operations of $1.5 billion year over year.
In its fourth quarter, Philips reported a net loss of $1.6 billion, compared with $1.1 billion in the same three months a year earlier. However, Philips said income included an impairment charge of $1.1 billion in the fourth quarter, as well as other special charges totaling $266.3 million. Excluding special items, net income in the fourth quarter reached $62.2 million, compared with a net loss of $110.6 million in the same quarter in 2001.
In the past four years, as Philips conducted significant acquisitions and recorded organic growth, it has decreased its CE business to 30.2 percent of total sales in 2002, down from 37.3 percent of total sales in 1998. Medical Systems, for one, jumped from 6.4 percent of total sales in 1998, to 21.5 percent in 2002, replacing the CE interest.