Consumer and electronic equipment maker Koninklijke Philips Electronics NV (PHG) Monday reported a profit for the fourth quarter, driven by lower costs.
However, quarterly revenues were down year-over-year, reflecting the impact of negative currency translation and sales declines in all three business segments. Based on market regions, North America witnessed the highest sales decline in the quarter.
The Amsterdam, the Netherlands-based company reported fourth-quarter net income of EUR 260 million, compared with a loss of EUR 1.18 billion a year ago. Net income attributable to stockholders reached EUR 251 million or EUR 0.27 per share, compared to a loss attributable to stockholders of EUR 1.17 billion or EUR 1.26 per share in the prior-year quarter.
The company attributed the results for the quarter to strong improvement in operational earnings and significantly lower charges compared to the fourth quarter of 2008.
For the preceding third quarter, the company's net income was EUR 176 million and net income attributable to stockholders was EUR 174 million or EUR 0.19 per share.
Philips' quarterly sales declined 5% to EUR 7.26 billion from EUR 7.62 billion in the previous year, hurt by a 4% negative currency impact. On a comparable basis, sales of EUR 7.26 billion were in line with last year. The company had posted sales of EUR 5.62 billion in the third quarter.
Financial expense for the quarter was EUR 95 million, lower than EUR 733 million in the same period last year, which included impairment charges related to LG Display, NXP, Toppoly and Pace Micro Technology. The year-ago quarter also included EUR 59 million of impairment charge related to TPV.
Gross margin improved to EUR 2.71 billion from EUR 2.42 billion in the prior-year quarter. The company also witnessed declines in selling costs, general and administrative expenses and research and development expenses.
Based on segments, Healthcare generated sales of EUR 2.41 billion, down 6% from EUR 2.57 billion a year ago, mainly due to the softness in the U.S. market. However, emerging markets showed double-digit growth. On a comparable basis, the segment's sales decline was 1%. Strong business at Home Healthcare Solutions along with growth at Customer Services partially offset declines at Imaging Systems and Healthcare Informatics, the company stated.
Sales at Consumer Lifestyle reached EUR 2.90 billion, a decline of 3% from EUR 2.99 billion in the previous year. Comparable sales were up 1%. While Television, Heath & Wellness and Shaving & Beauty recorded strong growth, Licenses, Audio & Video Multimedia and Peripherals & Accessories showed sales declines.
Lighting sales dropped 5% to EUR 1.85 billion from EUR 1.94 billion in the previous year. The segment's Automotive sales, and sales at Lumileds and Lamps were higher, offset in part by double-digit declines at professional Luminaries. In addition, strong growth in emerging markets was negated by sales declines in the U.S.
Group Management & Services, or GM&S, sales totaled EUR 109 million, 13% lower than EUR 126 million in the same quarter of fiscal 2008.
Market wise, North American sales declined 18% on a nominal basis, or 10% on a comparable basis, to EUR 1.79 billion from EUR 2.18 billion a year earlier. Western Europe posted sales of EUR 2.83 billion, on par with the year-ago quarter. Other mature markets delivered 12% growth in sales to EUR 416 billion.
Total sales of mature markets were EUR 5.04 billion, compared with EUR 5.38 billion in the previous year. Emerging markets recorded sales of EUR 2.22 billion, down 1% from EUR 2.24 billion in the fourth quarter of 2008. On a nominal basis, emerging markets sales rose 8%.
For fiscal 2009, Philips reported net income attributable to stock holders of EUR 410 million or EUR 0.44 per share, compared with a loss of EUR 91 million or EUR 0.09 per share last year. Net income was EUR 424 million, in comparison with a loss of EUR 92 million in fiscal 2008.
Full-year sales reached EUR 23.19 billion, up from EUR 26.39 billion in the previous year. Comparable sales were down 11% from last year, with main declines at Consumer Lifestyle and Lighting.
According to Philips, as disclosed earlier, it is involved in investigations on alleged violation of competition rules in the cathode-ray tube, or CRT, industry. The company has received a statement of objections from the European Commission on November 26, 2009 on this matter, and is currently preparing its response.
Further, Philips stated that it expects to close the process of renewing its existing US$2.5 billion revolving credit facility in the next few weeks. The facility will expire in December 2011.
The company will also propose at the General Meeting of shareholders to maintain a dividend of EUR 0.70 per common share, to be paid in cash or shares at the option of the shareholders.
Among rivals in the sector, General Electric Co. (GE) has reported Friday a 19% year-over-year decline in profit for the fourth quarter, hurt by a drop in earnings at GE Capital as well as a 10% decline in quarterly revenues. The Fairfield, Connecticut-based company reported net earnings of $2.94 billion or $0.28 per share, lower than $3.65 billion or $0.35 per share in the prior-year quarter. Total revenues declined to $41.44 billion from $46.21 billion in the same quarter last year.
Japanese consumer electronics company Sony Corp.'s (SNE) third-quarter results are set to be released on February 4. Wall Street analysts project a loss of $0.02 per share, on sales estimate of $25.51 billion.
Philip's another peer Panasonic Corp. (PC) is slated to announce its results on February 5.
Looking ahead, Philips expects the upward trend in merging markets to continue, supporting all three operating sectors. The company said it remains very much committed to growth and to delivering an EBITA profitability of 10% or better. Philips is also confident that 2010 will represent another solid step towards this target.
Philips Lifeline will introduce its next-generation medical alert service in the first quarter of 2010. The Lighting segment will bring a range of new LED lamps and LED-powered professional and consumer luminaries to the global market. In addition, GM&S is expected to have a total cost of EUR 90 million in the first quarter of 2010. The normalized cost level of GM&S is projected to be EUR 300 in full-year 2010, lower than EUR 400 million in 2009.
On the NYSE, PHG closed Friday's trading at $28.26, down $0.49, on a volume of 1.01 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.