Philips Electronics NV warned of substantially lower profits last month (CI No 2,880), and true to its word, yesterday posted a 31% drop in first quarter profits, saying it did not expect to see a pick-up before the second half of the year. First quarter net profit from normal operations came in at $228m, down from $330m in the 1995 first quarter. Analysts had forecast net profits of between $197m and $260m. The group also announced an extraordinary gain of $191m for the January-to-March period, most of which came from the sale of shares in ASM Lithography NV. The company maintained its forecast that comparable sales growth in 1996 would not be as strong as in 1995. Philips said the semiconductor business was still sound, but price erosion was eating into margins. Philips’ semiconductors and components division is the firm’s main moneyspinner contributing $300m to the group’s total first quarter operating profit of $418m. The company said it expects its troubled consumer electronics division to show an improvement in 1996, and said it should be in profit by the end of the year. Start-up costs for cellular phone- making caused part of the first quarter loss at the consumer products division and the new unit would remain in the red for another two years, Philips said. It said sales in Asia continue to be strong jumping 26% in the year. Europe, with $5,505m sales in the quarter saw the highest volumes but the smallest sales growth, struggling with slack economies and patchy consumer confidence. Total group turnover rose to $9,481m from $8,868m a year earlier.
