Amsterdam, The Netherlands — Connected displays and home entertainment networks posted strong sales growth in the third quarter, leading the consumer electronics segment at Philips Electronics to an 8 percent gain for the period. CE segment sales climbed to $3.07 billion, up from $2.75 billion in the same three months in 2004.
Income from operations for the Dutch company’s CE segment reached $198.1 million for the quarter, ended Sept, 30, compared with a loss of $14.5 million in the third quarter last year. Income from operations in the third quarter included a gain of $164.3 million due to the completion of the TPV deal. Excluding the gain and an $80.9 million reduction in license income, the CE segment’s income, excluding restructuring, showed a marked improvement, said Philips.
Adjusted for restructuring and the $164.3 million gain, CE segment income from operations, excluding licenses, grew to $14.5 million in the third quarter. Total restructuring charges amounted to $26.6 million, compared with $32.6 million in the same three months a year earlier. CE restructuring charges of $24.2 million are expected in the fourth quarter.
CE sector capital expenditures in the third quarter hit $23 million, down from the $24.2 million spend in the same three months a year earlier.
Philips reported sales growth in all regions, citing mainly North and Latin America. North American sales in the third quarter jumped 8 percent, hitting $2.5 billion, up from a year-on-year $2.3 billion. North American sales in the third quarter accounted for 28 percent of Philips’ volume.
Consolidated Philips sales rose 5 percent in the fourth quarter, coming in at $9.2 billion, up from a year-ago $8.7 billion.
“We were able to outperform weaker consumer markets thanks to innovative concepts like the new flat TV,” said Gerard Kleisterlee, president/CEO. “After a slower first half-year, we are pleased to see growth across Philips has picked up in the third quarter as we improved our profitability,” said Kleisterlee.
Consolidated net income reached $1.7 billion in the third quarter, up from $1.4 billion the previous year. The increase was primarily attributable to the sale of several businesses, which together yielded a non-taxable gain of $1.3 billion. In the third quarter of 2004, Philips included a $767.2 million non-taxable gain related to the Navteq IPO.
For the nine months, consolidated Philips sales increased to $25.8 billion from a year-ago $25.5 billion, while net income rose to $3.1 billion, from $2.8 billion in the same period the prior year.