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Philips posts US$355m profit
By Toby Sterling |
January 26, 2010, Tuesday
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ROYAL Philips Electronics NV, the world's largest maker of lights, reported yesterday a net profit of 251 million euros (US$355 million) for the fourth quarter, helped by lower one-time charges and job cuts.
The net profit reverses a loss of 1.18 billion euros in the same period a year ago, which included 629 million euros in impairment charges on assets. Fourth quarter sales fell 3.4 percent to 7.26 billion euros.
Philips cut 5,474 jobs in the past year and now employs around 116,000.
Chief Executive Gerard Kleisterlee said operating profit margins, excluding restructuring charges, were above 12 percent, their highest level in a decade.
The results "were better than expected on most counts," analyst Eric de Graaf of Petercam Bank wrote in a note on the earnings.
Though sales declined at Philips' consumer products and lighting divisions, De Graaf said they were still better than expected, and "margins were better ... all across the board."
De Graaf confirmed an "Add" rating on the shares but said he was considering raising estimates since sales have stopped falling from quarter to quarter and the company's margins may expand further.
Asia and Latin America were the main sources of the company's earnings growth, offsetting a flat performance in Europe and a decline in the United States.
Philips' operating profit from high-end medical products such as imaging machines was 392 million euros in the fourth quarter, versus 279 million euros a year ago.
On a phone call with reporters, CEO Kleisterlee forecast growth in the health care arm, already the company's most profitable.
"We are bound to see gradual improvement in health care" in 2010, he said. "The US market in our view has come to the low point, actually, from which with or without a conclusion of the Obama health care reform it can only go up."
At lighting, operating earnings were 41 million euros, versus a loss of 376 million euros a year earlier amid restructuring costs.
Philips noted that 10 percent of its lighting sales now come from light-emitting diode, or LED, lights.
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