Philips Misses Forecast Despite Massive Chip Gain

Posted 16 October 2006 @ 08:41 am EET     Print     Reprint     E-Mail     Comments

AMSTERDAM (Reuters) - Dutch Philips Electronics (PHG.AS) missed analysts' forecasts on Monday with a fall in third-quarter core profit, depressed in part by disappointing LCD displays sales, but said core operations had performed well. Net profit came in at 4.24 billion euros ($5.28 billion), including a gain, also of 4.24 billion euros, on the sale of its semiconductors business.

This compared with a median forecast of 257 million euros excluding the chip unit sale from by 15 analysts polled by Reuters. Net profit a year earlier was 1.436 billion euros on one-off gains of well over a billion euros.

Revenues did not rise in line with expectations, falling to 6.31 billion euros from 7.62 billion a year earlier and compared with a median analyst forecast of 6.53 billion. The decline was the result of the sale of the semiconductor business in the quarter. Philips reported an improvement in core earnings, however, which partly reflected a shift in investment to more stable and higher-margin business areas such as lighting, medical systems and domestic appliances.

It ranks as the world's biggest lighting maker and among the top three in hospital equipment and the top five in consumer electronics.

"We posted a significant year-on-year improvement in the performance of our main operating divisions," Chief Executive Gerard Kleisterlee said in a statement.

Earnings before interest and tax (EBIT) came in at 25 million euros including a charge for asbestos-related liabilities of 265 million. The median analyst expectation was for EBIT of 307 million against a year-ago profit of 442 million euros.

The maker of shavers, televisions, lamps and x-ray machines, is the third major electronics company to publish results after General Electric of the United States, which posted increases of 12.3 percent in sales and 6 percent in earnings, and Samsung Electronics (005930.KS).

The results were hit by a loss of 81 million euros from unconsolidated affiliates, mainly flat-display supplier LG.Philips LCD (034220.KS), of which Philips owns 32.9 percent and which published a record loss last week due to overcapacity and rapidly falling prices for its panels.

Philips shares, which closed at 27.92 euros on Thursday, are up around 7 percent this year, having outperformed European technology peers (^SX8P - news), which are up 2 percent, since the summer after Philips (NYSE:PHG - news) announced the sale of its chip business.