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Philips Reports 29% CE Sales Growth

4/18/2005 08:56:00 AM Eastern

Amsterdam, The Netherlands — Sales of flat-screen televisions and digital set-top boxes in North America during the first quarter helped push up consumer electronics segment sales at Philips Electronics by 7 percent.

CE segment sales hit $2.78 billion in the first three months, up from $2.60 billion in the same quarter in 2004. Philips noted that sales were “particularly strong” in North America, an increase of 29 percent, where Philips “achieved strong placements in key retail stores.”

“I am pleased with the progress being made in consumer electronics,” said Gerard Kleisterlee, CEO, “reflecting the successful implementation of our business renewal program. It’s encouraging to see another solid quarter, with steady performance and profitability in all our main businesses.”

CE sales increases, the company reported, generally were driven by sales gains in connected displays and home entertainment products.

However, CE segment operating income could not match the positive results of segment sales in the first quarter, ended March 31, coming in at $59.4 million, down from a year-ago $76.2 million.

The company said it had a downturn in license sales as well as lower operating income for its license business, driving down overall CE segment numbers. Also, segment income from operations included restructuring charges of $24.5 million in the first three months, compared with $18.1 million in the first quarter a year earlier.

Overall company Philips’ sales in North America during the first quarter reached $2.04 billion, up from a year-earlier $1.97 billion.

Philips recorded consolidated flat sales in the first three months, reaching $8.57 billion, compared with $8.56 billion year-on-year. Adjusted for the 2 percent downward effect of the weaker U.S. dollar and dollar-related currencies, comparable sales growth was 2 percent.

Consolidated operating income for the first quarter dropped to $249.2 million, compared with a year-ago $281.5 million. Overall sluggish demand for electronic goods and a chip overcapacity drove down first quarter net profit to $151.1 million, from $710.2 million in the same period last year. The year-earlier number was hiked by results from unconsolidated Philips companies, such as hospital equipment and semiconductors.

Philips, this quarter, also was adversely affected by its stake in such companies as South Korea’s flat-panel maker LG.Philips LCD, in which it has a sizeable stake. That company reported a 6 percent revenue slide as well as a first-quarter loss (see TWICE).

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