Strong demand for domestic appliances and energy-saving light bulbs helped drive first-quarter operating earnings at Philips, Europe’s largest consumer electronics group, above expectations to €292m (£200m).
Shares in the Dutch company rose 3% in early trading today, helping to propel European stocks to six-year highs despite the inexorable rise of the euro against the dollar and yen. The euro hit $1.355 against the greenback.
Philips said sales in its lighting division rose 8% in the first three months thanks to what Gerard Kleisterlee, chief executive, called “the increasing awareness of the need for lower energy consumption”.
The EU recently called for a mandatory switch to energy-saving bulbs by the end of the decade.
Pre-tax earnings in the division fell slightly to €177m, partly because of a €34m restructuring charge, but those in domestic appliances almost doubled to €104m on sales up 17% to €608m, helped by a 30% surge in demand in the US and China.
Overall sales rose 3% on a comparable basis to €6bn while net income soared to €875m, mainly thanks to a €733m gain on the sale of the group’s Taiwanese semiconductor business to private equity firm KKR in August. KKR paid €4.3bn.
But Philips’s consumer electronics business saw sales droop 6% to €2.2bn, with pre-tax profits up just €1m to €34m, because of slowing demand for TV monitors.
The medical systems business, seen as a key engine of future growth, also faltered with pre-tax earnings down from €79m to €56m.
Separately, shares in Hennes & Mauritz, the Swedish clothing retailer, surged more than 2% after it reported a 29% jump in sales in March.
David Gow in Brussels
Monday April 16, 2007
Guardian Unlimited