Philips Q3 Profits More Than Double After Disposing Off TV Business

Philips Q3 Profits More Than Double After Disposing Off TV Business

PHILIPS (BIT:PHIA) continues to beat the forecasts for the third straight quarter. The drastic restructuring has gathered pace and cost cutting measures have shown their magic. The Dutch lighting and electronics major said its third quarter profits rose to 170 million euros ($220 million) from 76 million euros in the same period a year ago.

Philips Q3 Profits More Than Double After Disposing Off TV Business

The Dutch lighting and consumer electronics major reported third quarter sales of 6.13 billion euros compared to 5.91 euros in the third quarter last year. Analysts were expecting Philips to report net profit of 139 million euros on 5.91 billion euros sales.

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After taking over as the chief executive of Philips last year, Frans van Houten has replaced entire top management, reset financial targets and cut 6,700 jobs to bring the company back into profit zone. The company had incurred 1.3 billion euros in losses in 2011. Houten has planned to cut 1.1 billion euros in overheads. He said on Monday that the company is on track with the third quarter savings of 306 million euros.

However, Mr. Houten still remains cautious due to three simultaneous headwinds: European crisis, sluggish growth in China and uncertainty in the United States. More than 50 percent of the company’s total sales comes from the United States and Europe. Samsung and LG Electronics are the biggest competitors of Philips in consumer electronics market, and it competes with Siemens and General Electric in the hospital and lighting markets.

PHILIPS (BIT:PHIA) has sold its unprofitable TV business to China’s TPV Technology Ltd. Now van Houten is considering options for audio and video equipment business that yields extremely low margins. Without giving a full-year forecast, he said that the company will post 4-6% sales growth, 10-12% increase in profits and 12-14% ROI in 2013.

The world’s largest lighting maker said that more than 25 percent of the lights it sells are LEDs, so the company has to close some units that manufacture traditional bulbs.

PHILIPS (BIT:PHIA) shares jumped as much as 5.1 percent after the third quarter results to 19.98 euros in Amsterdam. The company is currently valued at 19 billion euros.

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