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Philips reports sharp switch into annual profit

Electrical appliance and household goods group Philips switched back into profit in the whole of 2013 and in the last quarter, the company said on Tuesday.

THE HAGUE: Electrical appliance and household goods group Philips switched back into profit in the whole of 2013 and in the last quarter, the company said on Tuesday.

The Dutch group, which has developed rapidly in the high-margin medical equipment sector, reported net profit for the year of 1.17 billion euros (US$1.6 billion)from a loss of 30 million euros in 2012.

The turnaround was largely attributable to a leap in gross margins.

In the last quarter, profit amounted to 412 million euros from a comparable loss of 420 million euros.

The figures reflected increased profits and a reduction of restructuring charges, the group said, noting also that it had changed its accounting method during the year.

The results in 2012 had also been hit by a fine of several hundred million euros imposed by the European Commission for price-fixing on television screens.

Sales in 2013 fell by 1.0 per cent to 23.3 billion euros.

Earnings before interest, tax depreciation and amortisation more than doubled from 1.10 billion euros or 4.7 per cent of sales in 2012 to 2.45 billion euros, or 10.5 per cent of sales in 2013.

The group said that it was cautious about the outlook for this year because of uncertainty about the macroeconomic situation, risks over exchange rates and falling orders in the fourth quarter.

"Looking at 2014, we remain cautious because of ongoing macro-economic uncertainties, currency headwinds and softer order intake in the fourth quarter of 2013," chief executive Frans van Houten said.

"We expect that 2014 will be a modest step towards our 2016 targets, also taking into account restructuring to drive the new productivity targets and investments in additional growth initiatives."

Philips' restructuring programme started in 2011 is aimed at saving 1.1 billion euros by the end of 2014, notably by cutting 6,700 jobs.

Founded in 1891, Philips employs 114,000 people globally, about 2,000 fewer than in 2012.

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