After spending much of the early part of the decade sunk in gloom and misery, Philips Electronics NV looks disgustingly healthy these days, and with profits from normal operations more than doubled for the first quarter, despite the drag of the dollar, the company said the rise was the result of its aggressive policy of looking for business. It said currency uncertainty trimmed sales growth by 7% and may make the pace of growth in the first quarter hard to sustain for the rest of the year.The company said sales growth of semiconductors and components had exceeded expectations and there were no signs of softening demand – and very little price pressure. The book-to-bill ratio stood at 1.13 in the US and 1.18 in Europe. The division booked 28% higher sales on a comparable basis, adjusted for currency impacts, at $1,595m and made a $333m operating profit. Its purchase of a 50% stake in IBM Corp’s German chip plant had helped ease some delivery problems, it said. Geographically, the company said its operation in China was exciting and growing rapidly, but finding funding in the area in local currencies, and identifying experienced people to form joint ventures with was difficult. Philips currently has 15 joint ventures in China across the company’s range of activities and plans to extend this to 20 ventures in the near term – and it is already profitable in China overall. The big problem remains Germany, with Philips Kommunikations Industrie still making losses and not expected to return to profit in 1995. The communications equipment company had succeeded in winning orders outside its home market, but domestic German demand remains depressed. The professional products and systems division, to which the company belongs, was the only division to post an operating loss in the first quarter of 1995. The medical systems business is seeing waning profits.The company also says that it could take longer than previously expected for its German consumer electronics unit Grundig to return to profit. Grundig is still implementing an ongoing restructuring programme and will cut its workforce to 13,300 by the end of 1995 from 15,695 at end-1994.
