Reporting on a return to substantial profit – the net profit on ordinary activities came out at $441m compared with a $464m loss last time, Philips Electronics NV outdid analysts’ best guesses – they had been going for $260m to $440m. The profit is a welcome relief after three years of losses, huge charges and swingeing job losses. The ratio of net debt to group equity improved at end-1993 to 40:60 from 58:42 at end-1992, and affairs have continued in the same vein: the 1994 first quarter is turning out favourable, chairman Jan Timmer said. Restructuring is such a key part of Philips’ day-to-day business that annual charges of hundreds of millions of guilders should be seen as routine, the chairman said. We are thinking about not even calling them restructuring charges (but writing them down as operational costs), he said. Even the troublesome components and semiconductors division performed well last year and, although the market is cyclical, the outlook for 1994 is good. Operating profit almost doubled to $531m, and demand exceeded supply. The professional products division was dragged down by losses on German telecommunications, and operating profit fell to $92m from $341m. Job losses will also be needed at troubled Grundig AG. Philips is approaching multimedia and cable networks cautiously, Timmer said.
