Semiconductor sale bolsters Philips

Disappointing sales of liquid crystal displays and an unexpected charge for asbestos liabilities saw third-quarter core profits at Philips, the Dutch electronics group miss market expectations

Net income, however, almost tripled due to the sale of a significant stake in its semiconductors unit.

Europe’s largest maker of televisions, shavers, lamps and x-ray machines said on Monday that core operations had performed well.

“We posted a significant year-on-year improvement in the performance of our main operating divisions” chief executive Gerard Kleisterlee said in a statement.

Net profit jumped to €4.24bn ($5.28bn), from €1.44bn in the same period a year ago, but the figure was boosted by a gain €4.24bn through the sale of an 80 per cent stake in its semiconductor business.

Earnings before interest and tax were €25m, which included a charge for asbestos-related liabilities of €265m. That compared with analysts’ expectations for ebit of €307m compared with last year’s €442m.

Revenues were also below market expectations at €6.31bn, compared with €7.62bn a year earlier and analysts’ forecasts of €6.53bn. The decline was due to the sale of the semiconductor business, the company said.

The group reported an improvement in core earnings, however, as Mr Kleisterleee’s strategy of strengthening its involvement in stable and higher margin businesses of lighting, medical systems and domestic appliances took effect.

The company has spent more than $4bn in takeovers since the middle of last year in pursuit of the strategy.

Philips shares were down 59 cents at €27.33 in early Amsterdam trading.