Wed, Oct 15, 2003 - Page 10 News List

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

BLOOMBERG

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).

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top