* Q1 earnings beat forecasts
* Remains cautious for year on uncertain Europe
* Shares rise 3.7 pct
By Sara Webb
AMSTERDAM, April 23 Philips Electronics
reported better-than-expected quarterly results, buoyed by
one-off gains and a stronger performance at its consumer and
healthcare businesses, in the first signs of a long-awaited
turnaround under new management.
But the Dutch group warned that the outlook for the rest of
the year was still worrying given the weak economic environment,
as fragile consumer spending and government budget cuts in its
key markets have a direct impact on its three main businesses in
consumer electronics, medical equipment, and lighting systems.
"We remain cautious about the remainder of 2012 given the
uncertainties in Europe, particularly in the healthcare and
construction markets, and the slowing growth rate in the global
economy," Chief Executive Frans van Houten said in a statement.
While noting the turnaround in the first quarter, van Houten
flagged the need for further restructuring, and said Philips
must do more to shake up its corporate culture - considered to
be overly consensus-driven and cautious - in order to get its
new products onto the market quicker.
He reiterated that results in 2012 would be impacted by
restructuring charges and one-time investments, and so declined
to give a full-year forecast. However, the Dutch group stuck to
its guidance for 2013 of 4-6 percent sales growth, 10-12 percent
core profit and 12-14 percent return on invested capital.
Shares in Philips, which have underperformed over the past
year after a spate of profit warnings and other bad news, were
trading up 3.66 percent at 0857 GMT after jumping more than 6
percent earlier on Monday morning to the highest in a month.
Investors have been keen to see signs that management
changes and restructuring measures are finally paying off now
that Van Houten has been at the helm for a year.
Philips, which made a loss of 160 million euros ($211
million) in the fourth quarter of last year, reported
first-quarter net profit jumped 80 percent to 249 million euros
as sales climbed 7 percent to 5.608 billion euros.
Operating profit, or earnings before interest, taxes and
amortisation (EBITA), was 552 million euros, up 26 percent.
Analysts in a Reuters poll had forecast first-quarter net
profit of 186 million euros, and EBITA of 433 million euros, on
quarterly sales of 5.436 billion euros.
As Europe's largest consumer electronics producer, the
world's biggest lighting maker, and a top-three maker of
hospital equipment, Philips has blamed its poor performance in
the past year on weak economic growth, fragile consumer spending
and government budget cuts in several of its key markets.
It has struggled to compete with lower-cost Asian makers of
consumer electronics such as televisions, while cuts to
government budgets and other austerity measures in the United
States and Europe have hit demand for its lighting systems and
TOO SOON TO CRY VICTORY
The improvements were most evident in the consumer division
- which makes toasters, shavers and docking stations for
portable music players - as well as in the healthcare business,
whose products range from home oxygen kits to hospital scanners.
Van Houten said that Philips' healthcare products have
increased their market share, showing that "we're beating the
competition," even in a tough economic environment.
Operating profit for the lighting division, which has been
hit by a slowdown in the construction market, picked up from the
fourth quarter but was still sharply down from a year ago.
"It's too early to cry victory but we're on the right path
to improve" at that division, van Houten said.
The first-quarter results were boosted by one-off gains as
Philips freed up capital from some of its operations.
These included a 160 million euro gain from the sale of its
stake in the Senseo coffee brand to partner Sara Lee Corp.
, and profits from the sale of its high-tech office
campus in the Netherlands.
Philips sold the campus to a consortium of private investors
for 425 million euros and will lease back several of the
It also set up a television joint venture with Hong
Kong-based TPV in order to turn around the ailing
The head of the new venture said earlier this month that it
will become profitable and eventually be a top three global TV