Royal Philips Electronics NV, Europe's largest maker of consumer electronics, said first-quarter profit jumped because of a gain from the sale of a stake in Taiwan Semiconductor Manufac-turing Co (TSMC, 台積電).
Net income rose to 875 million euros (US$1.19 billion), or 0.79 euro a share, from 160 million euros, or 0.13 euro a share, a year earlier, Philips said in a statement yesterday.
Analysts had estimated profit of 832.3 million euros. Sales fell 2.8 percent to 5.99 billion euros, missing analysts' estimates.
Chief executive officer Gerard Kleisterlee cut the company's stake in TSMC, part of a shift away from chip assets to focus on units that make medical equipment, appliances and lighting. Philips said it's confident this year would show "further growth" and increased profitability.
The numbers were "OK, but not overwhelmingly good," said Corne van Zeijl, who oversees about 964 million euros, including Philips shares, at SNS Asset Management in the Dutch town of Den Bosch.
The focus on medical, appliances and lighting "has to lead to long-term higher profitability. In that sense, they're doing the right thing strategically," van Zeijl said.
The company, also the world's biggest maker of electric shavers and light bulbs, repeated full-year targets for sales growth and profit margins.
Year to date, shares of Philips had gained 2.7 percent, trailing the 5.7 percent increase of the Amsterdam AEX Index.
Philips, the world's largest maker of portable defibrillators, said first-quarter earnings included a non-taxable net gain of 697 million euros from cutting its stake in TSMC to 12.8 percent from 16.2 percent.
Earnings before interest, tax and amortization, or EBITA, rose to 353 million euros from 279 million euros a year earlier.
The company had been expected to report first-quarter EBITA of 302.7 million euros in the period, the survey showed.
The company made "strong progress'' in the quarter toward meeting its targets of between 5 and 6 percent average annual sales growth and EBITA of above 7.5 percent of sales, according to the statement.
Philips "feels good'' about the full-year sales forecast, chief financial officer Pierre-Jean Sivignon said in an interview.
Philips said last month it plans to have sold its entire stake in TSMC, the world's largest maker of custom-made chips, by 2010 after last year's sale of a majority stake in its chip unit to a group of buyout firms.
First-quarter sales at consumer electronics, the largest division by revenue, fell 8.9 percent to 2.21 billion euros as the World Cup spurred revenue in the year-earlier period.
EBITA as a percentage of sales rose to 1.5 percent from 1.4 percent a year earlier.
The company repeated a goal for profitability of about 3 percent this year for the division. The company, Europe's biggest maker of televisions, in January forecast a "challenging" first quarter for the unit as prices of flat-panel televisions decline.
Philips owns a third of LG.Philips LCD Co, the world's second-largest maker of liquid-crystal displays. The Dutch company has said it plans to reduce its holding in the panel maker.
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