Europe’s biggest producer of consumer electronics and semiconductors, Philips, booked a full-year net profit of €695m, much stronger than the €537m estimated by analysts and following its €3.2bn record loss of 2002.
The Eindhoven-headquartered company said its recovery was aided by €1.1bn of cost savings over 2003, some €100m more than targeted, and strong Christmas sales. It benefited from a lower than expected tax bill and a strong profit contribution from unconsolidated companies in Asia which make chips and flat displays.
However, these results didn’t prevent the Dutch electronics giant from laying off over 100 jobs in Dublin recently as a key administrative hub was moved to a lower cost location in Poland.
The company reported a full-year operating profit of €488m, falling short of expectations of €542m.
Philips blamed a lower level of sales of businesses and real estate and higher pension costs. Hurt by the weak dollar, full year sales dropped to €29.04bn from €31.82bn, but came in above expectations of €28.44bn on booming chip and consumer electronics sales.
Philips said it hoped for an easier and better 2004. “Our task is to maintain this momentum while steadily improving our earnings as we move through 2004. We’re better than ever positioned to deliver on our targets,” said chief executive Gerard Kleisterlee, adding he targeted revenues of more than €30bn euros in 2004.
Despite the absence of an outlook for the traditionally weak first quarter, investors drew comfort from Philips’ pledge to return to an overall operating margin of between 7 and 10pc within two to three years.
By John Kennedy
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