Royal Philips Electronics NV informed that its earnings in the third quarter almost doubled. Philips Electronics third-quarter results benefited from growth in emerging markets as well as the cost cuts implemented lately. Royal Philips Electronics believes that it is on a “good trajectory” to meet its 2013 targets.
Philips Q3 results
Philips Electronics informed on the 22nd of October that its earnings doubled in the third quarter due to growth at all company’s business lines, the TV business disposal and cost cuts as well. The maker of electric shavers and light bulbs informed that the global economic slowdown impacted sales at consumer and lighting business in developed markets, however the company’s healthcare sales were not affected. In fact, sales in this sector saw an increase.
According to data released by Philips Electronics, sales increased in the third quarter by approximately 5 percent to €6.13 billion, up from about 5.394 billion last year. Royal Philips Electronics net profit grew to €169 million compared with €74 million in the third quarter last year, when the company booked a €54 million loss on TV business. The Philips Electronics TV business has been sold recently.
In addition, Royal Philips Electronics results for the third quarter showed that the company’s sales in Europe fell about 2 percent, while sale in North America grew approximately 2 percent. Data showed that sales in emerging markets rose as much as 10 percent in the third quarter. Therefore Philips Electronics is counting on opportunities in emerging markets, including China, Middle East, Latin America and Russia as well. The company does not expect the quick recovery of European economy.
Frans van Houten, chief executive officer at Royal Philips Electronics NV, has informed that among best-selling products are, inter alia, a line of home cookers and docking stations for Apple Inc.'s iPhones and Android smartphones. Philips Electronics also said that LED lighting sales grew 50 percent year on year.
Philips turnaround plan
As it was stated by Frans van Houten in a statement released on the 22nd of October, “"We continue to experience strong economic headwinds on a global scale, which affect growth going forward." Philips Electronics also informed that the cost-cutting plan, which was implemented not so long time ago, was on track and that the company’s savings in the third quarter amounted to approximately €306 million. The turnaround plan, which was created by Frans van Houten, showed its first signs of success. However the company is still awaiting new reforms that will boost its performance. Frans van Houten is looking for approximately €1.1 billion in savings. He has also announced that the number of job cuts was increased to 6,700 Philips Electronics workers.
Certainly Philips Electronics is trying to adapt to new challenges. Therefore the company attempts to turn around its consumer products unit by focusing more on peripheral electronics devices such as docking stations for Apple Inc.’s iPhones. Royal Philips Electronics NV is doing whatever it takes to be a serious competitor to its main rivals General Electric Co. and Siemens AG. In this battle, the company has decided to restructure its portfolio. Royal Philips Electronics wants to focus on health and well-being products.