Philips Reports Strong Q2
Jul 18, 2006
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Sales increased strongly in the second quarter to 7.6 billion euros (approx. U.S. $9.5 billion), 10 percent above second quarter 2005. Adjusted for the effects of currency movements and consolidation changes, comparable sales increased by 11 percent, driven by strong growth in all operating divisions.

EBIT amounted to 367 million euros (approx. $458.9 million), compared to 158 million euros (approx. $197.6 million) in the same period of last year. Medical Systems, Lighting and DAP all delivered strong increases in profitability, as did Semiconductors, benefiting from its business renewal program. In difficult market conditions, the EBIT of Consumer Electronics held up. Brand campaign costs were 47 million euros (approx. $58.7 million) lower than in second quarter 2005 due to an amended seasonal spend pattern.

Financial income and expenses resulted in income of 127 million euros (approx. 158.7 million), compared to an expense of 57 million euros (approx. $71.2 million) in second quarter 2005. The improvement is due to the recognition of a TSMC cash dividend of 223 million euros (approx. $278.7 million), net of tax.

Unconsolidated companies recorded a loss of 105 million euros (approx. $131.3 million), 85 million euros (approx. $106.3 million) of which was attributable to LG.Philips LCD, compared to a profit of 822 million euros (approx. $1.0 billion) in second quarter 2005. Last year's figure included a gain of 753 million euros (approx. $941.4 million) on the sale of NAVTEQ shares, as well as income of 67 million euros (approx. $83.7 million) from TSMC.

Net income of 301 million euros (approx. $376.1 million) compared to 983 million euros (approx. $1.2 billion) in the corresponding period of 2005. Excluding last year's non-taxable gain of 753 million euros (approx. $940.8 million) attributable to the sale of shares in NAVTEQ, net income grew over 30 percent in the quarter.

Cash inflow from operating activities increased to 300 million euros (approx. $374.8 million), compared to 52 million euros (approx. $65 million) in second quarter 2005, due to lower additional working capital requirements. Inventories as a percentage of sales amounted to 12.2 percent, a decrease of 1.2 percentage points compared to second quarter 2005.

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