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Philips Q1 CE Sales Decrease 18%

4/16/2002 09:57:00 AM Eastern

AMSTERDAM, THE NETHERLANDS - Dogged by a weak performance in its audio, VCR and set-top box businesses, sales in the consumer electronics division at Philips Electronics dropped 18 percent in the first quarter, reaching $1.9 billion, compared with $2.4 billion in the year-ago period.

The company said sales of CE products into North America was "still loss making." However, overall division results showed growth for television, DVD and CE accessories.

Improvement in income from operations for the CE division was mainly due to the new business model for mobile phones. Philips reported $39.6 million in income from operations for the division in the first quarter, compared with a loss of $87.2 million in the year-ago three months.

Mainstream CE products dropped to $1.8 billion in sales for the first quarter, down from $2.2 billion in the first quarter of 2001. The company reported a loss from operations in mainstream CE products of $6.2 million in the first quarter, an improvement over the $138.3 million loss from operations recorded year over year.

Philips reported overall sales of its products into the United States climbed to $2 billion in the first quarter, up from $1.8 billion in the same three months in 2001.

Overall, Philips reported a net profit of $7.9 million, compared to a profit of $81.9 million the previous year. The small profit was well above analyst forecasts of a $274 million loss. Last year, Philips had a net loss of $2.3 billion.

Overall Philips sales for the first quarter decreased 7 percent, to $6.7 billion, down from $7.2 billion in the first quarter of 2001.

In general, Philips' outlook for the remainder of the year sees some market strengthening and a degree of improvement in economic conditions around the world. Since the third quarter of 2001, the company said margin improvements and cost management have been the main drivers for improved results.

During the remainder of the year, Philips said it would maintain a cautious stance on costs, capital expenditures, working capital and employment.