Philips turnaround beats predictions

Philips, the Dutch electrical goods and electronics group has reported a net profit of €124m in the third quarter, compared with a loss of €330m a year earlier. This turnaround was far better than market expectations.

Factors in the improvement included the improved results from associated companies such as the LCD venture with LG which made a profit of €239m, compared to a loss of €4m last year.

The group also had a non-cash gain of €68m from its stake in computer consultancy Atos Origin. This will lead to a gain in the first quarter next year of €120m.

Philips' quarterly sales fell 4% to just under €7bn, and underlying sales rose 6%.

The company posted an operating loss of €126m. This was due to €197m in restructuring charges - €152m was for the semiconductor division and €28m for consumer electronics.

Consumer electronics reported sales in the third quarter down 1% to €2.2bn with an operating loss of €32m. Philips said the electronics market remained characterised by price erosion and tough competition.