Amsterdam, The Netherlands — Royal Philips Electronics reported higher net sales but lower net income, and discussed its slower TV sales during the first quarter.
Net sales were $9.42 billion, up from $9.37 billion during last year’s first quarter, while net income dropped to $346.1 million from $1.38 billion in the previous year’s first quarter.
In a prepared statement, Gerard Kleisterlee, president/CEO, said the quarter was good “across most of our businesses,” but added, “unfortunately our results are clouded, more than we like, by the adverse situation in our TV business.”
In reviewing the first quarter, Philips described its recent five-year licensing agreement in which Funai will assume sourcing, distribution, marketing and sales of all Philips consumer TV activities in the United States and Canada as a “decisive action ... in improving the profitability of the television business.”
Sales in the first quarter for Philips’ consumer lifestyle division, which includes the connected displays unit in which TV sales are a part of, were down 2 percent to $1.93 billion from $2.04 billion “as a result of the continued focus on margin management.” Other businesses in the division including domestic appliances, shaving and beauty and peripherals and accessories all experienced growth.
Looking ahead, Philips expects “margin pressure at connected displays ... to continue” for the rest of the year. And it added that the sale of its set-top box and connectivity solutions unit will close by the second quarter of 2008.