The global electronics giant Philips reported a net profit of ?251 million (Dh1.3 billion) for the fourth quarter, helped by lower charges and job cuts. The profit reverses a loss of ?1.18bn in the same period a year ago, which included ?629m in impairment charges on assets. The company said it hoped to further improve profitability this year. "We were encouraged by our performance in the fourth quarter of 2009 - in what was still a tough economic climate - and are confident that 2010 will represent another solid step."
Philips said its fourth-quarter earnings were higher at all three divisions - lighting, health care and consumer products - although sales fell 3.4 per cent to ?7.26bn. The main source of the company's sales and earnings growth for the quarter to December 31 were Asia and Latin America, which offset a flat performance in Europe and a decline in the US. Philips's operating profit from high-end medical products such as imaging machines was ?392m in the fourth quarter, versus ?279m a year ago.
Gerard Kleisterlee, the chief executive, forecasts growth in the healthcare arm, already the company's most profitable. "The US market in our view has come to the low point, actually, from which with or without a conclusion of the Obama healthcare reform it can only go up," Mr Kleisterlee said. At the firm's lighting division, operating earnings were ?41m versus a loss of ?376m a year earlier amid restructuring costs.
Philips said 10 per cent of its lighting sales now came from LED lights. The company also benefited from the phase-out of incandescent bulbs because energy-saving bulbs have higher profit margins. At the consumer products division, operating earnings were ?260m against a loss of ?40m. "I think our portfolio is pretty robust," Mr Kleisterlee said. However, he said Philips would not resume its share buy-back programme this year as the economic recovery was still uncertain, preferring instead "to have financial flexibility to do acquisitions".
The company halted its ?5bn share buyback programme early last year, when the economic decline was hurting demand for the company's products. * with agencies