April 21, 2017 / 6:16 AM / 8 months ago

UPDATE 1-Philips Lighting Q1 earnings beat expectations on small sales decline

(Updates with details, background, quote)

AMSTERDAM, April 21 (Reuters) - Philips Lighting, the world’s biggest lighting maker, reported a 17 percent increase in first-quarter core earnings on Friday, beating expectations on rising LED sales in Europe that offset falling sales of traditional bulbs.

Adjusted earnings before interest, taxes, and amortisation (EBITA) were 142 million euros ($152.18 million) from 121 million in the same period a year earlier. Sales fell 0.7 percent to 1.69 billion euros.

Analysts polled for Reuters had seen sales down 2 percent and EBITA at 136 million euros.

Philips repeated forecasts for improved margins and a return to sales growth in 2017.

The decline in sales slowed “in comparison to previous quarters, driven by double-digit growth” in LED lights and home lighting systems, CEO Eric Rondolat.

The LED division increased EBITA to 39 million euros from 20 million euros, improving margins by cutting costs despite LED price erosion, the company said.

At its traditional lamps division, still its most profitable, EBITA fell to 114 million euros from 124 million euros.

Philips’ professional lighting division, which many analysts say represents its best opportunity to improve earnings, increased both sales and margins fractionally, leading to EBITA of 13 million euros versus 6 million euros a year earlier.

Rondolat told reporters that the company has an order backlog in North America and results at the division should strengthen in the second half.

The company’s home lighting systems division, which sells programmable LED lights under the “Hue” brand, swung to a 3 million euro EBITA profit from a loss of 12 million in the same period a year earlier, on the back of 20 percent sales growth to 148 million euros -- a strong performance in the division’s traditionally weakest quarter.

Philips floated its lighting division as a separate company in May 2016 and has gradually sold its stake down to 53.89 percent. Shares, which were sold at 20 euros in the initial public offering, closed at 27 euros on Thursday.

$1 = 0.9331 euros Reporting by Toby Sterling; Editing by Christian Schmollinger and David Evans

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