Consumer resurgence helps to double Philips result

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PHILIPS, the Dutch electronics group, more than doubled net profit in the first quarter to 260m guilders ( pounds 95m) from 103m guilders a year earlier. The results, at the high end of expectations, were helped by lower financing costs and by a surprising recovery in the consumer electronics division.

The group remains cautious about the outlook for 1994 as a whole. Dudley Eustace, finance director, said market conditions in Europe were still difficult and consumer spending remained depressed.

Philips cut 2,900 jobs during the three months to 31 March, after shedding 13,700 staff in 1993. It had previously warned of further redundancies as it continues to reorganise and reduce costs.

Sales in the first quarter declined slightly to 13.65bn guilders, partly because of exchange rate movements. Operating income rose to 695m guilders from 560m a year earlier and financing costs were 106m guilders lower as a result of reduced debt.

The consumer electronics division made a profit of 42m guilders compared with a loss of 28m in the first quarter of 1993. The turnaround was in spite of reduced sales in Europe and downward pressure on prices. It was helped by smaller losses at Philips' German affiliate, Grundig. Jan Timmer, Philips' president, said in March that the performance of Grundig, which made a loss of almost DM300m ( pounds 123m) in 1993, was one of the main problems confronting the group.

The semiconductor and component division increased profits to 372m guilders from 189m a year earlier. The lighting operation saw a slight decline in income to 262m guilders, partly a result of reduced sales in North America.

Philips has been struggling back to health after plunging into crisis in 1990 with a loss of 4.2bn guilders. Last year it made a net profit of 1.965bn guilders, after extraordinary items, compared with a loss of 900m guilders in 1992. The 0.5 guilder dividend for 1993 was the first paid by the group since 1989.