Bloomberg: Royal Philips Electronics NV, Europe’s biggest consumer-electronics maker, unexpectedly posted a profit in the third quarter as operating earnings at the consumer unit more than doubled.
Third-quarter net income jumped to 174 million euros ($256 million), or 19 cents a share, from 57 million euros, or 6 cents, in the year-earlier period, the Amsterdam-based company said today. Analysts had predicted a loss of 44.7 million euros, the average of 13 estimates compiled by Bloomberg.
“They’re coming out of the recession more strongly than I had previously thought,” said Peter Olofsen, an Amsterdam-based analyst at Kepler Capital Markets who has a “reduce” rating on the stock. “The cost savings are being implemented with a lot of drive. Now the waiting is for a recovery in sales.”
Philips shares rose the most since April 2 in Amsterdam trading after operating profit before amortization at the consumer unit, which makes Senseo coffee machines and flat- screen televisions, climbed to 129 million euros, aided by job cuts. Chief Executive Officer Gerard Kleisterlee in July raised his annual cost-saving goal to more than 600 million euros from 500 million euros. Kleisterlee, who’s slashing 6,000 jobs, said at the time that he would cut expenses further if necessary.
The second straight quarterly profit for the Dutch company followed losses of more than 1.2 billion euros in the two preceding quarters as the economic slump cut demand. Philips saw “a stabilization of consumer sentiment,” Chief Financial Officer Pierre-Jean Sivignon said in a Bloomberg Television interview.
“The proof of the pudding will be in the upcoming selling season, Christmas and Thanksgiving, and we have to see how that actually works out in the weeks to come,” he said.
Philips shares climbed 7.7 percent, to 18.35 euros in Amsterdam. The stock has gained 33 percent this year, compared with a 30 percent increase of Amsterdam’s benchmark AEX Index.
The company is “cautious about the short-term outlook in the absence of structural recovery” in most of its markets, it said. Philips will focus its restructuring next year on the lighting and health-care units, Sivignon said on a conference call today.
In the third quarter, sales fell to 5.62 billion euros from 6.33 billion euros, beating the 5.45-billion euro average estimate of the 20 analysts surveyed.
Earnings before interest, taxes and amortization increased to 344 million euros from 57 million euros in the year-earlier period. Profit was helped by a gain of 87 million euros linked to a release of a provision for retiree medical benefits.
The television unit’s operating loss narrowed to 26 million euros from 73 million euros a year earlier.
“TV is almost break even and it has been quite a bleeder,” said Victor Bareno, an analyst at SNS Securities in Amsterdam, who put his “reduce” rating under review. “The cost reductions and restructurings are having a substantial and positive impact.”
Revenue at the consumer lifestyle division declined 20 percent from a year earlier to 2.07 billion euros. Sales at the health-care unit, the world’s largest maker of patient- monitoring systems, rose 1 percent to 1.82 billion euros, while the lighting unit’s sales declined 11 percent to 1.65 billion euros.