Philips recorded net income of 983 million euros (approx. U.S. $1.2 billion), compared with net income of 616 million euros (approx. $742.7 million) in the corresponding period of 2004.
Sales amounted to 7,087 million euros (approx. $8.6 million), 3 percent lower than in second quarter of 2004. The weaker U.S. dollar and dollar-related currencies, as well as various divestments, had a downward effect of 2 percent. On a comparable basis, sales decreased by 1 percent. Solid growth at Medical Systems and Lighting was offset by declines at Semiconductors and Mobile Display Systems (MDS).
Income from operations amounted to 147 million euros (approx. $177.4 million), compared to 356 million euros (approx. $429.6 million) in the same period of 2004. Unconsolidated companies contributed 822 million euros (approx. $992.4 million) to net income. Results from unconsolidated companies in the second quarter of 2004 amounted to 430 million euros (approx. $519.1 million), including a net license gain of 99 million euros (approx. $119.5 million) related to InterTrust Technologies Corp. LG Philips LCD's contribution to net income was 10 million euros (approx. $12.1 million), compared to 251 million euros (approx. $303 million) in the second quarter of 2004.
Cash flow from operating activities was an inflow of 37 million euros (approx. $ 44.7 million), compared to an inflow of 62 million euros (approx. $74.9 million) in the second quarter of 2004. Inventories as a percentage of sales amounted to 13.3 percent, compared to 12.5 percent in the second quarter of 2004.
"We continue to make steady progress in implementing our strategy by delivering on our management agenda. The quarter showed growth in both the revenue and profitability of our Medical Systems business; we also announced the first acquisition in this important field," said Gerard Kleisterlee, Philips' president and CEO. "In a weak consumer retail environment, we are seeing the benefits of our Business Renewal Program in Consumer Electronics. Weakness in the technology sector, however, continued to hamper our results."
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