Philips Announces Q3 Results
Oct 17, 2006
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Sales increased by 1 percent in the third quarter to 6.3 billion euros (approx. U.S. $7.9 billion). Adjusted for the effects of currency movements and consolidation changes, comparable sales increased by 5 percent, driven by strong growth in the high-margin Medical Systems, DAP and Lighting divisions, partly offset by some decline at CE as a consequence of the division’s focus on margin improvement.

EBIT in the quarter amounted to 290 million euros (approx. $363.8 million), before changes in estimation methodology for asbestos-related product liabilities, which resulted in a charge, net of insurance recoveries, of 265 million euros (approx. $332.4 million). In the third quarter of 2005, EBIT of 353 million euros (approx. $442.8 million) included a gain of 136 million euros (approx. $170.6 million) due to the completion of the TPV deal. Excluding this gain, Medical Systems, Lighting, DAP and CE delivered strong increases in profitability compared to the third quarter of 2005.

Financial income and expenses resulted in income of 32 million euros (approx. $40.1 million), including gains of 97 million euros (approx. $121.7 million) from TSMC, compared to income of 190 million euros (approx. $238.3 million) in the third quarter of 2005. Last year’s figure included a gain of 233 million euros (approx. $292.3 million) on the sale of the remaining stakes in Atos Origin and Great Nordic.

Unconsolidated companies recorded a loss of 81million euros (approx. $101.6 million), which was wholly attributable to lower results from LG.PhilipsLCD. The third quarter 2005 income of 929 million euros (approx. $1.2 billion) included a gain on the sale of shares in TSMC, 460 million euros (approx. $576.9 million) and a sale of shares and dilution gain at LG.PhilipsLCD totaling 310 million euros (approx. $388.8 million).

Net income of 4.2 billion euros (approx. $5.3 billion) compared to 1.4 billion euros (approx. $1.8 billion) in the corresponding period of 2005. Income from discontinued operations was 4.2 billion euros (approx. $5.3 billion), mainly due to the estimated gain on the sale of the Semiconductors division. Income from continuing operations in third quarter 2005 included 1.0 billion euros (approx. $1.3 billion) from the sale of various stakes and a dilution gain at LG.PhilipsLCD.

Cash flow from operating activities increased from 246 million euros (approx. $308.6 million) in third quarter 2005 to 678 million euros (approx. $850.5 million). Compared to third quarter 2005, inventories as a percentage of sales improved by 0.2 percent to 12.7 percent.

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