Philips Electronics squeezed out a second-quarter net profit of €42 million to defy expectations of a loss, but sales slumped on weak consumer spending and the impact of the SARS outbreak.
The electronics conglomerate stuck to all its restructuring objectives but issued no full-year earnings forecast, warning continued low consumer confidence would hurt sales of its consumer electronics operation.
Philips said it still expected its key chip unit to return to profitability in the fourth quarter after two facilities have been shut down. The second-quarter loss for that unit was cut to €139 million.
Chip factories were running at 66 per cent of their capacity at the end of the second quarter, up from 61 per cent at the end of the previous quarter, although this was partly due to an inventory build-up.
Philips's largest division, the consumer electronics business, suffered the most from weak consumer spending, with currency-adjusted sales falling 5 per cent.
Overall sales fell 18 per cent to €6.53 billion - disappointing analysts' expectations of a more modest 16 per cent decline. Sales were hit mainly by a weaker dollar. On a comparable level, sales were down 1 per cent, which was also weaker than most analysts had hoped.
Philips's surprise net profit after two years of almost continuous losses compared with a net loss of €1.36 billion in the second quarter of 2002.
Philips shares rose in early trade, up 1.66 per cent at €18.95 this morning, slightly outperforming a barely higher Dutch blue-chip index.