Healthcare and Lighting have got Philips off to a confident start in 2008, with Q1 figures for both sectors showing growth and solid profits. Consumer Lifestyle’s results were fundamentally good, but adverse market conditions led to disappointing results for the TV business. Now that decisive steps have been taken to address this issue, 2008 is expected to be another year of progress for Philips.
Moving ahead
Total sales in Q1, at EUR 5,965m, were slightly higher than last year. Net income was well down from Q1 last year at EUR 219m: last year’s Q1 figures were boosted by the proceeds from the sale of shareholdings as part of our capital reallocation program. Earnings before Interest, Tax and Amortization (EBITA) came in lower than Q1 last year at EUR 265m, reflecting lower earnings at Connected Displays, acquisition-related expenses and lower license income. We continued to grow strongly in emerging markets.
TV troubles acted on decisively
Healthcare and Lighting both performed well, and many of Consumer Lifestyle’s businesses generated good margins. But the television business suffered from difficult market conditions around the world, especially in North America. It has therefore been decided that, as of September 1, we will transfer our television activities in that region to the Japanese company Funai. Funai will make and market our TVs there under license. This will not only generate license income for us, but will protect the profitability of our TV business as a whole from developments in that market, while at the same time making sure that our brand remains clearly visible in the North American TV market.
2008 – another year of progress
“I’m confident that 2008 will prove to be another year of solid progress for us, as we move towards the targets set out in Vision 2010,” says Gerard Kleisterlee. “During the coming period, we’ll continue to optimize our portfolio, improve productivity and offer customers exciting new products. And if we need to take additional measures to deal with the effects of softening economies and maintain our margins, we’ll do so.”
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