Philips defies tough trade conditions to advance 48%

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The Independent Online
PHILIPS, the Dutch electronics giant, increased net profits from business operations by 48 per cent to 117m guilders ( pounds 41m) in the second quarter of the year from 79m guilders in the same period last year, in spite of continued difficulty in its main markets, writes Mary Fagan. The company also made an extraordinary gain of 1.1bn guilders from the sale of its stake in Matsushita Electronics Corporation, bringing total net income to 1.2bn guilders in the three months.

'The prime focus has been saving money, whether or not it came from cutting costs or investment,' Dudley Eustace, finance director, said. Interest charges in the first half of the year fell to 638m guilders from 717m guilders, with a sharp fall in the second quarter.

The sale of businesses, debt rollover, and pruning of unprofitable activities cut short- term debt to 4.14bn guilders at 30 June from 6.7bn at the end of 1992.

Debt has fallen to 112.8 per cent of shareholders' funds compared with 156.4 per cent at the end of 1992.

In the first half of the year, Philips shed 5,800 people excluding staff losses from business disposals. Interim net income from normal business fell to 220m guilders from 241m in the first six months of 1992.

Sales in the first half fell by 2 per cent to 27.2bn guilders. The consumer electronics division suffered from declining markets and falling prices resulting in lower sales and a loss of 150m guilders.

In other consumer products, operating profits rose to 357m guilders from 347m. PolyGram's strong performance was partly offset by high development costs for software for Philips' CD-I system, while profits from domestic appliances and personal care were flat. Strong growth in semiconductors helped to increase operating profits in the components arm to 474m guilders from 275m in the same period last year. Lighting also showed a rise to 486m guilders from 468m a year earlier.