Philips' Second Quarter Results 2008

Philips reports strong sales of EUR 6.5 billion, up 6% year-on-year; EBITA rises to EUR 413 million

  • Strong comparable sales growth of 6%, fueled by 16% growth in emerging markets.
  • EBITA increased to EUR 413 million from EUR 386 million in Q2 2007, mainly driven by higher earnings at Lighting. 
  • Strong contribution to results from recent acquisitions, both in Home Healthcare Solutions and in Professional Luminaires.
  • Consumer Lifestyle performed well in a weaker environment; plans to improve the Television business remain well on track.
  • Net income of EUR 720 million includes a gain of EUR 780 million on the sale of TSMC shares and an impairment charge of EUR 299 million for NXP. Net income for Q2 2007 included a EUR 1.2 billion gain in respect of TSMC.


Gerard Kleisterlee, President and CEO of Royal Philips Electronics:

 

“Our second quarter results are a reflection of both the quality and the resilience of our overall business portfolio in a rapidly deteriorating macro-economic environment. Revenue growth was excellent, with currency-corrected nominal growth of 14% and comparable growth of 6%, well ahead of both last year as well as the previous quarter. Also profitability developed positively, as increased contribution from the business, including the latest acquisitions, more than offset the impact of incidental results. We also continued to successfully expand our strong position in high-growth emerging markets.

 

Our Healthcare sector posted strong results in Home Healthcare Solutions, Patient Monitoring and Clinical Care Systems. Imaging Systems posted lower results but continued to increase its order book backlog, with a better product mix, which gives us confidence for the full year. In a much-weakened consumer environment our Consumer Lifestyle business continued to perform well, and the implementation of our Television strategy of rightsizing and selective growth is ahead of plan. Also, Lighting continued to deliver, helped by their balanced exposure to different end markets, both from an application and a geographic perspective.

 

The execution of our plans kept us well on track with regard to the implementation of our Vision 2010 strategy and ambition.”

Financial Report

Presentation

Audio Webcast

The second quarter results conference call with Pierre-Jean Sivignon, CFO, will start at 10:00AM CET on Monday, July 14, 2008. Replay will be made available via audio webcast at approximately 12:30PM CET and will be accessible for a year. Furthermore a transcript of this call will be published the following day.

Pierre-Jean Sivignon

Q2 Highlights

Acquisitions

Dixtal

Philips further strengthened its presence in two key emerging markets through the acquisitions of Brazilian critical care company Dixtal and Chinese patient monitoring company Goldway.

Further optimization of TV Business

PC Monitor

Philips agreed on terms of a brand-licensing agreement under which it will transfer its PC monitors business, IT Displays, to TPV. Philips will receive revenue-based royalties as part of the agreement. Besides this transfer, Philips also closed the sale of the Set-Top Box and Connectivity Solutions activities to U.K.-based Pace Micro Technology.

High-resolution, low radiation

BrightView XCT

Philips launched the latest addition to its nuclear medicine product portfolio with the introduction of the BrightView XCT which stands out as it delivers high-resolution CT images while exposing patients to only low radiation doses.

LED Lighting

LED Lighting

French insurer Generali will be the first company worldwide to have an entire office building lit by LED lighting, with Philips being the sole supplier for this innovative project in Paris.

Awarded

Arcitec and Aurea

Philips’ Arcitec shaver and Aurea TV have received the Australian Design Mark as part of the 50th anniversary of rewarding design excellence in the country.

For further information, please contact:

Joon Knapen

Philips Corporate Communications
Tel:  +31 20 59 77477   
Email:  joon.knapen@philips.com

Arent Jan Hesselink

Philips Corporate Communications
Tel:  +31 20 59 77415   
Email:  arentjan.hesselink@philips.com

About Royal Philips Electronics

Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a diversified Health and Well-being company, focused on improving people’s lives through timely innovations. As a world leader in healthcare, lifestyle and lighting, Philips integrates technologies and design into people-centric solutions, based on fundamental customer insights and the brand promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately 133,000 employees in more than 60 countries worldwide. With sales of EUR 27 billion in 2007, the company is a market leader in cardiac care, acute care and home healthcare, energy efficient lighting solutions and new lighting applications, as well as lifestyle products for personal well-being and pleasure with strong leadership positions in flat TV, male shaving and grooming, portable entertainment and oral healthcare. News from Philips is located at www.philips.com/newscenter.


Forward-looking statements

This document contains certain forward-looking statements with respect to the financial condition, results of operations and business of Philips and certain of the plans and objectives of Philips with respect to these items, in particular the outlook paragraph in this report. Examples of forward-looking statements include statements made about our strategy, estimates of sales growth, future EBITA and future developments in our organic business. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.
These factors include but are not limited to domestic and global economic and business conditions, the successful implementation of our strategy and our ability to realize the benefits of this strategy, our ability to develop and market new products, changes in legislation, legal claims, changes in exchange and interest rates, changes in tax rates, pension costs, raw materials and employee costs, our ability to identify and complete successful acquisitions and to integrate those acquisitions into our business, our ability to successfully exit certain businesses or restructure our operations, the rate of technological changes, political, economic and other developments in countries where Philips operates, industry consolidation and competition. As a result, Philips’ actual future results may differ materially from the plans, goals and expectations set forth in such forward-looking statements.
Statements regarding market share, including those regarding Philips’ competitive position, contained in this document are based on outside sources such as specialized research institutes, industry and dealer panels in combination with management estimates. Where information is not yet available to Philips, those statements may also be based on estimates and projections prepared by outside sources or management. Rankings are based on sales unless otherwise stated.

 

Use of non-US GAAP information
In presenting and discussing the Philips Group’s financial position, operating results and cash flows, management uses certain non-US GAAP financial measures. These non-US GAAP financial measures should not be viewed in isolation as alternatives to the equivalent US GAAP measure(s) and should be used in conjunction with the most directly comparable US GAAP measure(s). A discussion of the non-US GAAP measures included in this document and a reconciliation of such measures to the most directly comparable US GAAP measure(s) are contained in this document.

 

Use of fair-value measurements
In presenting the Philips Group’s financial position, fair values are used for the measurement of various items in accordance with the applicable accounting standards. These fair values are based on market prices, where available, and are obtained from sources that are deemed to be reliable.
Readers are cautioned that these values are subject to changes over time and are only valid at the balance sheet date. When a readily determinable market value does not exist, fair values are estimated using valuation models which we believe are appropriate for their purpose. They require management to make significant assumptions with respect to future developments which are inherently uncertain and may therefore deviate from actual developments. In certain cases, independent valuations are obtained to support management’s determination of fair values.