AMSTERDAM-Philips Electronics NV released its second-quarter results, reporting a 28-percent drop in net earnings. The Dutch group posted net income of $288 million, down from $400 million in the same quarter last year.
The fall in earnings can be attributed in part to its semiconductor division, which posted a 6-percent loss in sales for the first half of the year. In addition, the company said, the consolidation of newly acquired VLSI, as of June 1, and the related write-off process had a negative impact on the current results.
In addition, sales growth for the company was low, just 1 percent in the second quarter, due mainly to the strength of the North American market, said Philips. “Sales growth in the first half year was lower than in the prior year in the regions (of) Europe and Latin America due to the high comparison base in 1998 … Sales in North America sustained strong growth of 10 percent. Sales growth of 5 percent in Asia-Pacific in the first six months was slightly lower than the 7 percent growth level a year ago.”
On the positive front, sales in Philips consumer products increased by 6 percent year-to-date. Income from operations improved to $182 million from last year’s $3.15 million, mainly due to a significant reduction in losses from Philips Consumer Communications. “Activities (in the unit) have been more focused following the dissolution of the joint venture with Lucent (Technologies Inc.).”
Despite the overall negative earnings results, Philips said it expects a more favorable second half of the year, saying earnings from continuing operations should compare favorably with the second half of 1998.
