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Philips reports sales increase of 5% in third quarter report

22 October 2005

Philips sales increased to 7,626, 5% above the 2004 third quarter figure, comparable to 4% after adjustments for currency movements and consolidation changes. Sales were driven by strong growth in all main product divisions except Semiconductors. Medical Systems sales increased 7%.

Net income was 1,436 million (€1.14 per share), compared with net income of 1,172 million (€0.92 per share) in the corresponding period of 2004. The increase was primarily attributable to the sale of several stakes which together yielded a non-taxable gain of €1,086 million. Q3 2004 included a €635 million non-taxable gain related to the NAVTEQ IPO.

Philips' President and CEO Gerard Kleisterlee said, "After a slower first half-year, we are pleased to see growth across Philips has picked up in the third quarter as we improved our profitability. Thanks to the solid underlying performance during the quarter, we are on track with our financial targets and delivering on our commitments. We were able to outperform weaker consumer markets thanks to innovative product concepts like the new Flat TV and shaver ranges. We also saw improving results from our Semiconductors business as our renewal program begins to take effect. In addition, our Medical Systems business continued to show strong revenue growth.

During the quarter, we made progress in implementing our strategy by further reducing our stakes in other companies. We used some of the proceeds to acquire Stentor, a leading healthcare IT company, and to support our share buy-back program. We also announced a significant investment in the emerging technology of solid-state lighting through the planned acquisition of a further 47% stake in Lumileds."

Sales in the Medical Systems sector increased by 7% to 1531, a record for the third quarter, driven by computed tomography, X-ray, and cardiac and monitoring systems, which showed double digit growth. The was driven by all businesses except MedQuist, Nuclear Medicine and Medical IT. Philips reports that the customer response to the acquisition of US PACS supplier Stentor was positive, it has affected sales and orders in IT as customers put their orders on hold in anticipation of the product, iSite PACS from Stentor. Very strong sales growth was reported in the China and Japan.

Full 2005 third quarter report:
www.philips.com/about/investor/section-13701/index.html

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