Philips Electronics NV (PHG) on Monday reported a sharp fall in its first-quarter earnings, hurt by lower gains from the sale of stakes. Group sales were up a meager 1%. Despite the poor results, the Amsterdam, Netherlands-based company confirmed its Vision 2010 target.
The company's first-quarter net income was 219 million euros, compared to 875 million euros last year. The prior-year quarter results were boosted higher gains on the sale of stakes.
Income from continuing operations declined to 232 million euros from 852 million euros in the previous-year quarter. The company's current-year quarter results included a gain of 83 million euros on the partial sale of the company's shareholding in LG Display, whereas, the prior-year quarter included a net gain of 733 million euros from the partial sale of the shareholding in Taiwan Semiconductor Manufacturing Co., or TSMC (TSM).
Philips also reported a loss of 13 euros from discontinued operations compared to a profit of 23 euros in the previous-year quarter, due to final settlements related to the Semiconductors transaction in the first quarter of 2007.
EBITDA for the quarter was 256 million euros, or 4.4% of the sales, versus 370 million euros, or 6.2% of the sales, in the same quarter of last year.
Group sales totaled 5.97 billion euros, up 1% from 5.93 billion euros in the same quarter of last year.
Looking ahead, Philips said it is confident that 2008 will be another year of progress. The company now expects group-level EBITA margin to be in the range of 10% - 11% in 2010, with average annual sales growth of above 6%, supported by the integration of Respironics, VISICU and Genlyte and the company's current share buy-back program.
The company also confirmed its objective to more than double EBITA per share by 2010 from the 2007 level.
Further, Philips said that it will take additional measures to deal with the effects of softening economies where needed in order to keep its margins.
PHG closed Friday's trade at $37.31, down $1.06, on a volume of 1.59 million shares.