Philips, Europe's largest electronics company, said today that it had returned to profit in the first quarter, driven mainly by strong demand for computer chips and liquid crystal display (LCD) screens, and forecast a positive 2004.
Royal Philips Electronics posted net profit of €550m, at the high end of forecasts by analysts. The Dutch company had lost €69m in the first quarter of 2003.
The 2004 first quarter performance also had benefited from a contribution of €457m in profit from associated companies, the company said.
'We will be in the black at the net profit level in 2004,' chief financial officer Jan Hommen said.
'Our results and our order books indicate that the company is on a more stable footing now, and we should see this trend continue through the rest of 2004,' chief executive Gerard Kleisterlee said. 'During 2004, we expect to progressively focus less on recovery and regrouping and more on the construction and expansion of our company,' the CEO said.
The company said it would further reduce indirect costs and targeted an additional €250m in savings.
Philips profited in the first quarter from improving demand for semiconductors, particularly in the mobile phone market. Sales rose 16% on a comparable basis from a year earlier to €1.3 billion, resulting in operating profit of €75m.
For 2004, Hommen said sales were expected to climb 20%, in line with the sector. Philips also benefited from strong global demand for flat screens. It said its joint LCD venture with South Korean company LG Electronics posted net profit of €215m and the outlook was bright for the rest of the year.
However, overall sales growth of 2% on a comparable basis, to €6.631 billion, disappointed analysts.
