Philips Electronics NV amazed analysts by turning in second quarter net profits better than expected, despite continued losses on consumer sales. The company’s second quarter net profits, up 48.1% at the equivalent of $60.8m on turnover down 1.3% at $26,000m, reflected a strict belt-tightening exercise, which involved redundancies and the selling of businesses. The figures were of course flattered by the arrival of $2,100m from Matsushita Electric Industrial Co Ltd for Philips’ stake in the Matsushita Electronics Ltd semiconductor joint venture, and the company also pointed to falls in interest rates as a source of profit in the first half. Philips’ tighter financial control, which also enabled it to reduce short and long-term debt by 38.2% and 7.5% respectively, provided a cash surplus of $9,000m, against a deficit of $3,400m last time. The news pushed share prices up 7% on the week, while Philips hinted at a possible $0.48 dividend for the year, following zero dividends since 1989. Even so, the company’s professional products and systems division was hit by the recession according to the company, and the consumer products division’s losses, while down slightly, are still significant with not much upturn expected before 1994. Telecommunications revenue was still down due to lack of sales in Europe. The company still expects to keep its promise and spend up to approximately $635m – the remainder of its $3,800m restructuring reserve – to eliminate up to 15,000 jobs this year – over 5,000 have already gone.
