TV slump fails to slow Philips
Europe's biggest consumer electronics company, Philips shrugged off slow TV sales to announce almost doubled first half profits yesterday, but it warned that unfavourable currency markets would hold its figures back for the year as a whole.
Net profits in the six months to June jumped to 1.13 billion guilders from 662 million, boosted by a surge in operating income from semi-conductors and components to 1.12 billion guilders from 750 million.
Consumer electronics remained by far the biggest sales generator, with first-half turn-over of 9.7 billion guilders, although sales were a touch lower than in the same period last year. Profits from the division were 219 million guilders (211 million).
Total group sales in the first half increased to 29.28 billion guilders from 27.96 billion previously. Lighting, the second biggest division, booked income from operations of 499 million guilders, against a previous 491 million.
Philips also announced an outline deal to sell part of its Communication Systems division's public network assets to US telecoms giant AT&T Corp for an undisclosed sum.
Completion of the deal is expected by the end of the year. Philips finance director Dudley Eustace said he did not expect profits to be diluted as funds raised from the sale would be ploughed back into the rest of the communications business.
Under the deal, two thirds of the loss-making Philips Kommunikations Industrie (PKI) of Germany and around half of the French-based Telecommunications Radioelectriques et Telephones (TRT) - also loss-making - will go to AT&T.
"We're selling the business because we're not big enough to be a major player against the huge telephone companies," Eustace said. "We will concentrate on portable phones and faxes rather than fight the majors in that business."
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