Philips reverses losses, books EUR 695m profit

10 February 2004

AMSTERDAM — Dutch electronics firm Philips has returned to profitability after recent record losses, reporting a EUR 695 million net profit last year in comparison with its EUR 3.2 billion loss in 2002.

Philips also said on Tuesday that is semiconductors division booked positive results in the last quarter of 2003, ending a run of losses that spanned 10 consecutive quarters, newspaper NRC Handelsblad reported.

But the Dutch multinational did not make any definite forecasts for 2004, despite indicating that it anticipated maintaining “the upward trend”.

The 2003 result is in sharp contrast to the 2002 result and the EUR 2.6 billion loss of 2001. Per share the profit was EUR 0.54 compared with a EUR 2.51 loss in 2002, news service NOS reported.

Philips chief Gerard Kleisterlee attributed the turnaround to stringent financial discipline which cut EUR 1 billion in costs.

The results are better than analysts expected, but Philips also reported a decline in turnover from EUR 31.8 billion to EUR 29 billion. This was due to the cheap US dollar because without currency exchange effects, Philips’ sales actually increased by 10 percent.

Turnover in the fourth quarter remained relatively stable, when Philips recorded profit of EUR 598 million compared against a EUR 1.5 billion loss — mainly due to write offs — in the fourth quarter of 2002.

The biggest change came in the semiconductor division, which recorded a EUR 166 million profit in the fourth quarter last year compared with a EUR 304 million loss in the same period the year before.

But the semiconductor division recorded a EUR 342 million loss for 2003 and Philips expects a small turnover decline for the first quarter of 2004.

Despite the economic malaise last year, Philips is the latest Dutch company to report better-than-expected figures, with banking giant ABN Amro and chemical concern Akzo Nobel reporting good results in recent weeks.

But telecoms firm KPN has announced plans for another round of lay-offs, while airline KLM reported a third quarter profit of EUR 8 million for its 2003-04 financial year. The Dutch flag carrier booked a EUR 66 million loss in the same period of 2002-03.

Subject: Dutch news