Philips Electronics NV has finally turned the corner in the third quarter. The Amsterdam-based company is confident that it will achieve its aim of double-digit growth in earnings this year and the company’s order book is the longest we’ve ever seen according to CFO Jan Hommen.
Income in the third quarter to September 30 rose 92.7% to 372m euros ($402.2m) on revenue 5.8% higher at 7.7bn euros ($8.3bn); for the nine months net income was 18.8% lower at 1.1bn euros ($1.2bn) on revenue 0.3% down at 21.8bn ($23.6bn). Income per share was 109.4% up at 1.11 euros for the quarter and 16.2% down at 3.19 euros for the nine months.
Philips’ semiconductor operation is however lagging behind in the group’s recovery with sales on a comparable basis down 2% to 2.6bn euros ($2.8bn). However Philips puts this down to the fact that the upswing in consumer products, to which its products are geared, is proceeding more slowly than the market as a whole. CFO Hommen says the book to bill ratio has improved every month in the past quarter and was now in the range 1.2 to 1.3.
Semiconductor plants are now operating at 90% of capacity and Philips expects them to be flat out shortly. What is expected to make a major contribution to its semiconductor operation is VLSI Technology Inc, the San Jose, California company acquired in June, which will give it expertise in the area of ASICs. In the consumer products area, Philips says that sales growth of 7% was driven by PC peripherals, notably monitors and audio.
Philips Consumer Communications, formerly a disastrous joint venture with Lucent which was dissolved last year, is now showing strong sales growth. It has yet to contribute to the bottom line though Philips says there has been a significant reduction in losses.
