AMSTERDAM--Royal Philips NV (PHG) on Monday said it expects
sales growth will be subdued by the continuing weak global economy
in coming quarters even as the Dutch lighting and health-care
company's third-quarter net profit more than doubled, mainly on
lower operating costs.
Net profit for the three months ended Sept. 30 rose to 282
million euros ($385.7 million) from EUR105 million a year earlier.
Sales were down 3% to EUR5.62 billion, mainly due to the negative
impact from a weaker dollar.
"This was another solid quarter for Philips, especially in light
of the challenging global economic environment," said Chief
Executive Frans van Houten, noting the improvement of operational
results showed the benefits of the company's restructuring
program.
But Philips warned sales growth isn't expected to improve in the
quarters ahead. "Ongoing headwinds in the global economy are
expected to continue to affect sales growth in the coming
quarters," Mr. van Houten said.
Under the leadership of Mr. van Houten, the Amsterdam technology
company has focused on a narrower range of businesses and cut costs
to improve profitability. It generates almost 80% of sales from its
lighting and health-care businesses, which sell products such as
hospital scanners and light-emitting-diode, or LED, lighting and
control systems.
At its capital markets day in September, Philips failed to
impress investors with its financial targets for the next three
years. The company aims to increase margins to 11% to 12% for the
period until the end of 2016 on sales growth of 4% to 6% on
average. It will continue to restructure its operations and boost
efficiencies to improve profitability, while returning more cash to
shareholders.
In the third quarter, Philips's operating margin reached 10%, up
from 6.3% a year ago. Last month, Philips said that margins for
full-year 2013 would come in at the low end of its 10% to 12%
range. On Monday, it said it remains committed to these goals.
Since Mr. van Houten took over in April 2011, Philips has sold
its money-losing television business and earlier this year struck a
deal to transfer its lower-margin audio, video and multimedia
business to Japan's Funai Electric Co. (6839.TO). The company
increasingly has focused product innovations on local needs to
increase sales.
Write to Robin van Daalen at robin.vandaalen@wsj.com
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