Philips on pounds 47m in third quarter

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The Independent Online
PHILIPS, the Dutch electronics giant, continued its recovery with higher-than-expected profits in the third quarter of the year. In spite of poor economic conditions in Europe, the company reported net income of 133m guilders ( pounds 47m) in the three months to 30 September, compared with a loss of 139m guilders a year ago.

Dudley Eustace, Philips' finance director, said the group would continue to sell off companies and reduce debt in 1994, aiming eventually for a debt- to-equity ratio of 40:60 compared with 52:48 at the end of September.

Philips' net profit from normal operations in the first nine months more than doubled to 353m guilders from 102m. Mr Eustace would not forecast full-year prospects. 'Anybody who starts forecasting in today's economic environment is guessing very wildly,' he said. However, he maintained that the consumer electronics operations would break even during 1994.

Analysts welcomed Philips' return to third-quarter profit as another sign that it is keeping a tight rein on its finances.

Philips said that margins in consumer electronics and lighting, particularly in Europe, had come under increased pressure in the third quarter of 1993.

Mr Eustace said continued underperformance in Europe had been balanced by a better performance in the rest of the world.

Earnings were helped by a shortage of components and semiconductors for televisions, personal computers and portable communications equipment. The company said that after an 'overhang' of components last year, a shortage this year helped operating profit in the division increase to 757m guilders in the first nine months from 339m guilders a year ago.

The group expects to shed about 12,000 jobs this year, of which 8,000 have already gone. Yesterday Philips said it would axe 1,250 of the 5,500 jobs at its Philips Telekommunikations Industrie subsidiary in Germany by early 1994.

PKI is suffering from price erosion and a sharp reduction in orders from its main customer, Deutsche Telekom.