Philips reports third quarter rise in profits

PHILIPS ELECTRONICS beat earnings forecasts for the third consecutive quarter, boosted by cost cuts and higher sales, as a drastic overhaul of the company gathered pace.

The figures came as Swedish home appliances maker Electrolux announced it saw market demand staying weak in Europe. It will push ahead with cost and production cuts in the region.

The company’s view is more mixed on North America, where it sees market demand falling up to 1 per cent this year – in contrast to the earlier forecast for demand to be flat or rise 2 per cent – but where it expects a pick up in the near future.

Netherlands-based Philips, known for its hospital scanners, electric toothbrushes, wake-up lights and coffee makers, yesterday said third-quarter net profit more than doubled helped by higher sales across its health, lighting and consumer divisions.

Since taking the helm last year, chief executive Frans van Houten has reset financial targets, cut thousands of jobs and replaced his entire top executive team in an effort to turn around the company which lost €1.3 billion in 2011.

Philips said plans to cut €1.1 billion in overheads are on track with savings in the third quarter of €306 million.

The company first started to show signs of a pick-up in the first half of this year. But Mr Van Houten yesterday said he was still cautious about the firm’s growth prospects.

Sales for the third quarter rose to €6.13 billion from €5.39 billion a year earlier. Net profit rose to €170 million from €76 million.

Electrolux, which yesterday also posted a rise in quarterly earnings in line with forecasts, has also been cutting costs by moving manufacturing from high wage countries in Europe to cheaper nations like Poland and Mexico.

The world’s second-biggest home appliances maker after US group Whirlpool, Electrolux reported adjusted third-quarter earnings before interest and tax of 1.46 billion crowns.

The group said earnings where supported by price increases, previous cost-saving activities and current measures to reduce costs, while they were hurt by weak demand and lower sales volumes, particularly in some of the key European markets. – (Reuters)