Philips’ Q4 net profit beats expectations

25 Jan 2010

Global electronics giant Philips has reported a better-than-expected net profit for its fourth quarter, which is said was driven by strong improvement in operational earnings and significantly lower charges.

Net profits in the final three months of 2009 totalled €260 million, the company said, compared to a loss of €1.17 billion reported in the same period in 2008, and beating analysts’ forecasts of €255 million.

Philips’ sales in the fourth quarter were €7.3 billion, slightly down from €7.6 billion a year earlier.

The Dutch company shed 5,700 jobs during the fourth quarter.

“Thanks to the increased resilience of our company, we ended the year with a strong fourth quarter,” said Philips president and CEO, Gerard Kleisterlee.

Comparable sales came in at last year’s level, delivering a record adjusted profitability of 12.3pc. This reflects our strengthened fundamentals and the successful manner in which we have been managing through the downturn.”

Improved performance across all sectors

Kleisterlee said the company’s improved performance was visible across all three of its operating sectors.

“Despite continuing weakness in the US market, our healthcare sector managed to deliver another bumper quarter with sales broadly on par with the strong performance of last year and with significantly higher earnings,” the company said.

Philips also said its consumer lifestyle sector managed to show sales growth, with television turning a profit and most other businesses posting significantly higher earnings, “despite the absence of a material recovery in consumer confidence”.

The company also said its lighting sector “continued on its road to recovery with strongly improved earnings and rebounding sales, even though the commercial construction market continued to be in decline”. It also said that, for the first time, LED-based products exceeded 10pc of total sector sales.

A simpler, more agile company

“Philips today is a simpler company that is both agile and more resilient to market fluctuations. We faced the economic recession in 2009 head-on, but without sacrificing our longer-term ambitions,” Kleisterlee said.

“While today’s economic circumstances do not allow for a reliable prediction of future developments, I am confident that based on our Q4 performance, the strength of our portfolio of globally leading businesses and our engaged workforce, 2010 will be a year of further progress towards becoming the leading company in health and well-being,” he added.

Kleisterlee also said that as a sign of the company’s confidence in its future it is proposing to maintain its dividend at €0.70 a share, which is on par with last year.

Photo: Philips president and CEO, Gerard Kleisterlee

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