PHG Koninklijke Philips NV

By Maarten van Tartwijk 

AMSTERDAM--Shares in Royal Philips NV rose 6% after the Dutch electronics group said Tuesday its operational performance continued to improve as it works toward the sale of its iconic lighting business.

Philips Tuesday reported a net loss of EUR39 million ($42 million) in the three months ended Dec. 31, compared with a net profit of EUR134 million in the same period a year earlier, largely the result of one-time pension charges and higher taxes.

Adjusted earnings before interest and taxes, the company's preferred measure of its operational performance, rose 13% to EUR842 million. Total sales rose 9% to EUR7.1 billion, and by 2% on a constant currency basis.

Analysts said the underlying results were better than expected, and Philips shares climbed nearly 6% in Amsterdam.

The earnings report is likely to be one of the last before Philips completes the separation of its nearly 125-years-old lighting arm, for which it is exploring either a sale or an initial public offering in the first six months of this year.

The sale is part of wider strategic overhaul in which Philips seeks to concentrate on its more profitable and faster growing healthcare-technology business, where it competes with Siemens AG and General Electric Co.

Philips' healthcare arm recorded sales of EUR3.3 billion, up 3% at constant currencies, lifted by strong order intake in North America, Western Europe and China. The business signed three multiyear deals with hospitals as it seeks to shift its focus away from manufacturing to services.

The lighting division, meanwhile, reported sales of EUR2 billion, down 2% on a constant-currency basis, reflecting the continued decline in sales of incandescent lightbulbs. But the unit posted a 19% rise in adjusted operating profit, due in part due to cost-savings and strong sales of light-emitting diode, or LED, lamps.

"The strong result of Lighting is especially welcome in the light of a potential sale or IPO," ING said.

Chief Executive Frans van Houten said "multiple parties" have shown interest in the business, but declined to give further comment.

The Wall Street Journal, citing people familiar with the matter, reported earlier this month that U.K. industrial firm Melrose Industries PLC is considering a bid for the unit, which could be valued as high as EUR6 billion.

Mr. van Houten also said Philips has started the search for a new buyer for its LED-components business, Lumileds, after a $2.8 billion deal with a Chinese investor was blocked on national-security grounds by the powerful Committee on Foreign Investment in the U.S.

A new deal is expected to be closed in the second half of this year, but likely at a lower price. "The [previous] deal was very attractive and may not be repeatable," Mr. van Houten said.

Write to Maarten van Tartwijk at maarten.vantartwijk@wsj.com

(END) Dow Jones Newswires

January 26, 2016 06:31 ET (11:31 GMT)

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