Philips reports accelerating profits and announces US$2.0 bil. buyback
AFPTHE HAGUE -- Dutch group Philips, which has transformed itself away from some of its traditional businesses, reported an almost three-fold surge in third-quarter net profit on Monday.
October 22, 2013, 12:06 am TWN
The company also announced that later in the day it would begin to buy back its own shares under a program totaling 1.5 billion euros (US$2.0 billion).
Philips has experienced great difficulties in recent years and has responded with a restructuring which has involved reducing and refocusing its lighting and television businesses, for which it is still known worldwide.
The group has diversified into medical equipment and healthcare, which offer higher margins.
The group's traditional household appliances activities had come under strong pressure from competitors, notably in Asia.
However, the latest results showed that the part of the business which grew the fastest was the household appliance division where sales on a comparable basis surged by 9.0 percent, and mainly in emerging markets where sales rose by 10.0 percent.
Net group profit for the quarter was 282 million euros from 104 million euros in the same period last year, an increase of 171.0 percent.
The improvement reflected a better operating outcome and reduced restructuring charges.
Group sales fell by 3.0 percent to 5.62 billion euros, but on a comparable asset base they rose by 3.0 percent.
Philips, emerging from two years of radical restructuring, also said that in the third quarter it had reduced its costs by 183 million euros.
The group employs slightly more than 114,000 people worldwide, or nearly 5,000 fewer than 12 months earlier.
The restructuring, called the “Accelerate!” program, is intended to generate cost savings of 1.1 billion euros by the end of 2014, mainly be means of shedding a total of 6,700 jobs.
Chief executive Frans van Houten said in a statement that “this was another solid quarter for Philips, especially in light of the challenging global economic environment.”