Philips Electronics, the world's largest lighting manufacturer, reported fourth-quarter profit ahead of market estimates, helped by demand for medical equipment and job cuts.

The Amsterdam-based company said today earnings rose 50 per cent to €875 million, beating the €866 million previously estimated. Sales gained 6.7 per cent to €7.16 billion.

Chief executive Frans van Houten is working through a company wide overhaul to save €1.1 billion that includes cutting 6,700 jobs and eliminating management layers to accelerate decision-making.

The Philips veteran, now almost two years at the helm, is also moving the manufacturer into high- margin areas such as lighting products that save energy and health-and-wellness products, and away from a consumer- electronics past.

"Our operational results improved across all sectors, as a result of increased sales, overhead cost reductions, and gross margin expansion," Mr Van Houten said.

"The challenging economic environment in 2012, notably in Europe and United States, has impacted our order book, and hence we expect our sales in 2013 to start slow and pick up in the second half of the year," he said, reiterating the company's full-year targets.

Philips also said today that it agreed to transfer its Lifestyle Entertainment business, which includes DVD players, to Funai Electric, which will pay a cash consideration of €150 million and a brand license fee.

Philips competes with Siemens and General Electric in health-care equipment such as medical scanners as well as in lighting. Philips third division, which makes consumer products, has shrunk over the years as customers flock to competitors such as Sony or Apple for mobile communications and music devices.

Bloomberg