PHILIPS ELECTRONICS has reported better-than-expected quarterly results, buoyed by one-off gains and a stronger performance at its consumer and healthcare businesses, in the first signs of a long-awaited turnaround under new management.
However the Dutch group has warned that the outlook for the rest of the year was still worrying given the weak economic environment, as fragile consumer spending and government budget cuts in its key markets have a direct impact on its three main businesses in consumer electronics, medical equipment and lighting systems.
While noting the turnaround in the first quarter, chief executive Frans van Houten flagged the need for further restructuring, and said Philips must do more to shake up its corporate culture – considered to be overly consensus-driven and cautious – in order to get its new products on to the market quicker.
He reiterated that results in 2012 would be affected by restructuring charges and one-time investments and so declined to give a full-year forecast. However, the Dutch group stuck to its guidance for 2013 of 4-6 per cent sales growth, 10-12 per cent core profit and 12-14 per cent return on invested capital.
Shares in Philips, which have underperformed over the past year after a spate of profit warnings and other bad news, closed up 3.5 per cent in Amsterdam after opening more than 6 per cent higher.
Philips, which made a loss of €160 million in the fourth quarter of last year, reported that first-quarter net profit jumped 80 per cent to €249 million as sales climbed 7 per cent to €5.608 billion.
Operating profit, or earnings before interest, taxes and amortisation, was €552 million, up 26 per cent.
As Europe’s largest consumer electronics producer, the world’s biggest lighting maker and a top-three maker of hospital equipment, Philips has blamed its poor performance in the past year on weak economic growth, fragile consumer spending and government budget cuts in several of its key markets.
The improvements were most evident in the consumer division as well as in the healthcare business. – (Reuters)
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