Philips, the Dutch electronics, health and lighting group, said on Monday that it remained cautious about the economy as it unexpectedly reported a small profit, thanks to cost-cutting efforts that compensated for sharply falling revenues.
The group, which has reduced its net debt to €600m from €1.5bn a year ago and is shedding 6,000 jobs, beat analyst expectations for a loss with a third-quarter net profit of €176m ($259m) or 19 cents, up from €58m or 6 cents a year ago.
Philips’ sales fell 11 per cent to €5.62bn, with the “consumer lifestyle” division that includes products from televisions to baby bottles seeing a 15 per cent fall in sales, the lighting division dropping 13 per cent and healthcare falling 4 per cent.
The company said it remained “cautious about the short-term outlook in the absence of structural recovery in the majority of our end-markets”.
Philips’ shares opened 5.6 per cent higher at €18 in early trade following the expectation-beating results .
While it has won praise for its restructuring efforts, the group remains at the mercy of weak markets. Its most defensive division, healthcare, has failed to shine in the recession due to reduced spending in the US on big-ticket diagnostics equipment such as CT scanners.
The consumer lifestyle division, the source of recent pain, saw sales slip to €2bn from €2.6bn, but more than doubled operating profit to €129m thanks in part to smaller losses from its television business, where the group last year chose to exit the US market.
Gerard Kleisterlee, chief executive, sought to highlight sequential quarterly improvements in sales and earnings across the Philips businesses and said: “I remain confident that Philips will come out of this recession as a stronger company and a leader in our field.”