Royal Philips Electronics NV, the world’s biggest lighting company, reported higher-than-expected second-quarter profits, helped by cost cuts and reduced losses in the television business.
Second-quarter net income attributable to shareholders rose to 259 million euros (US$334 million) from 44 million euros a year earlier, the Amsterdam-based company said in a statement yesterday. Analysts had predicted profits of 252.5 million euros, the mean of 14 estimates compiled by Bloomberg.
Philips, whose healthcare and lighting units compete with General Electric Co and Siemens AG, last year set out to slash 6,000 jobs to bolster profitability.
The company predicts that its fixed-cost base will be more than 700 million euros lower this year than in 2008. Philips posted a second quarter of year-on-year sales growth as customers resumed spending after the global economic slowdown.
“You still see a strong profit recovery, the margins continue to improve,” said Peter Olofsen, an Amsterdam-based analyst at Kepler Capital Markets, in a telephone interview.
“They’ve become slightly more positive for the full-year outlook, but this is something the market already took into account,” Olofsen said.
Sales rose to 6.19 billion euros from 5.23 billion euros, in line with the 6.17 billion euro average estimate of 20 analysts.
“Assuming that the current economic climate will continue, we are confident that we can exceed” adjusted earnings before interest, taxes and amortization (EBITA) as a percentage of sales of 10 percent this year, the company said.
Last month, chief executive officer Gerard Kleisterlee, who will be replaced as CEO by Frans van Houten next year, told investors the company was “increasingly confident” of reaching adjusted EBITA at 10 percent of sales as early as this year.
Earnings before interest, taxes and amortization rose to 527 million euros, from 118 million euros a year earlier. EBITA as a percentage of sales was 8.5 percent.
However, the company guided that sales in the second half would slow down, which sent the stock dropping as much as 4.3 percent to 23.83 euros in Amsterdam trading. It was down 2.7 percent as of 10:22am.
Comparable sales growth will slow to a “mid-single-digit level” in the second half, reflecting a “continued but slow recovery in the US and Europe,” Philips said.
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