Wed, Oct 15, 2003 - Page 10 News List

Philips posts profit in 3rd quarter with cost cuts and gains


Royal Philips Electronics NV, Europe's largest consumer-electronics maker, said it had a third-quarter profit as cost cuts took hold.

Net income was 124 million euros (US$146.3 million), compared with a 330 million-euro (US$389.4) million) loss in the year-earlier period, the Amsterdam-based company said.

Philips' Chief Executive Officer Gerard Kleisterlee is working to meet a goal of saving 1 billion euros (US$1.18 billion) by 2004 after the company lost 5.68 billion euros (US$6.7 billion) in the last two years.

To revive profit, he has shed more than a fifth of the workforce, moved production to countries with lower labor costs and reined in spending.

``We see our change programs are having a positive impact on our performance,'' Kleisterlee said in the statement.

Third-quarter sales fell 4 percent to 6.99 billion euros (US$8.25 billion) from 7.31 billion euros (US$8.63 billion) , mainly because of weaker currencies, Philips said.

The company had an operating loss of 126 million euros (US$148.7 million) in the quarter, which included 152 million euros (US$179.3 million) in restructuring costs in the semiconductor unit, compared with an operating profit of 135 million euros (US$159.3 million) in the year-earlier quarter.

It was the second straight quarterly profit and the third time the company reported a quarterly profit since Kleisterlee became CEO at the end of April in 2001. Since the first quarter of 2001, Philips has lost more than 5.5 billion euros (US$6.49 billion), mostly as the result of writing down the value of the company's stake in Vivendi Universal SA and lower sales of semiconductors.

Philips, founded in 1891 as a maker of electric lamps, is also Europe's third-largest semiconductor maker and makes chips used in Nokia Oyj phones, Sony Corp TVs and Bayerische Motoren Werke AG cars.

Unconsolidated companies, which includes the LG.Philips LCD Co liquid-crystal displays venture with South Korea's LG Electronics Inc, helped net income in the quarter, after contributing a 4 million-euro loss (US$4.72 million) in the year-earlier quarter.

The company's consumer electronics division, its largest business by sales, had a third-quarter operating loss of 32 million euros (US$37.7 million), from a 8 million-euro (US$9.44 million) profit in the year-earlier period. Sales in the unit fell 1.1 percent to 2.2 billion euros (US$2.6 billion).

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