Reporting a 36% drop in first quarter profits (see opposite) yesterday, Philips Electronics NV declined to make any forecast of full-year results. The results were at the top end of analysts’ expectations. The first quarter figures showed that problems remain in its key consumer electronics market, which used to account for about half the group’s total revenue. A breakdown of the latest figures shows that the consumer electronics division made an operating loss of $31.1m, similar to its shortfall of $33.4m in the same period last year. I would hate for any of you to go away and say the first quarter is an indication and multiply that by four, Reuter quotes finance director Dudley Eustace as saying. In Europe we’re seeing no relief at all, he said. Average prices had fallen by about 2% and, despite cost-cutting, were continuing at these levels in April. He said that the consumer electronics division intended to reduce sharply the range of products offered. The estimate is by the end of the year they should have reduced their product range by about 20%. Eustace said Philips was about two-thirds dependent on Europe which made the continent-wide recession a potentially serious drag on results. A strong performance by the components and semiconductors division helped the better than expected overall results and a surge in chip sales helped propel the components division to operating profits of $122m, up 67%. The volume of semiconductor business was up 8% on last year after product line pruning. The telecommunications business in Germany had been hit hard by the economic downturn there, pulling professional products and systems into a first quarter loss of $5m against a $72m profit a year ago. Communications systems, based mainly in France and Germany, suffered falling sales and price pressure, particularly in Germany; medical systems improved slightly but industrial electronics did worse; cash from the Matsushita Electronics Corp deal is due this quarter.
