Dutch consumer electronics giant Philips has reported substantial profits of €616m for the second quarter, driven primarily by return to profitability in its semiconductor and consumer electronics divisions.
Sales amounted to €7.2bn, an increase of 11pc over the same period last year. The weaker US dollar and dollar-related currencies had a downward effect of 3pc. Comparable sales increased by 14pc. Income from operations was a profit of €356m, compared with a loss of €26m in Q2 2003.
Cash flow from operating activities was €62m. In Q2 2003 cash flow from operating activities totalled €148m. Inventories as a percentage of sales amounted to 12.5pc, compared to 12.8pc in Q2 2003. The company said it expected sales growth of 7-8pc in the second half of this year.
Gerard Kleisterlee, Philips’ president and CEO, commented: “Clearly, Philips is on its way to sustained profitability and growth. The board of management is pleased to see the strong increase in top-line revenue, with improved income from operations and net income reflecting the benefit of continued financial discipline and focus on execution.
“Based on our innovation pipeline, a well-filled order book and a reduced cost structure, we are confident that in the second half of the year we will see ongoing growth in revenues and earnings across our divisions.”
Going forward, it emerged that Philips expects charges of €50m in the second half of 2004 due to a restructuring programme that is expected to save the company €500m by the end of 2005.
In line with the recovering chip industry, Philips’ chief financial officer Jan Homen forecast chip sales to rise 28pc to 29pc in dollar terms in 2004.
By John Kennedy