Philips Posts 3Q Net Profit, Remains Cautious

Royal Philips Electronics NV (PHIA.AE) Monday posted an unexpected net profit for the third quarter, as lower sales were partly offset by cost savings and a one-time gain, but said it remained cautious in the absence of structural recovery in most of its end-markets.

Net profit for the three months ended September 30 was EUR174 million, up from a net profit of EUR57 million in the same period last year. Analysts had expected a EUR45 million net loss.

Earnings before interest, taxes and amortization, analysts' preferred measure of operating performance, came in at EUR237 million compared with a EUR133 million loss a year ago.

The figure includes EUR125 million in restructuring charges, offset by a EUR87 million gain due to the release of a provision for retiree medical benefits and a EUR30 million impairment reversal.

The Amsterdam-based company posted a better-than-expected 11% drop in sales during the quarter. Analysts had expected a 15.1% fall.

Philips shares have gained 31% in the last three months, outperforming the AEX which gained 28% in the same period, as cyclicals outperformed defensive stocks and many analysts upgraded Philips' rating and target price. Friday, Philips shares closed at EUR17.04.

-By Robin van Daalen, Dow Jones Newswires; [phone]; [e-mail]