AMSTERDAM – Royal Philips Electronics NV said Monday its first quarter earnings rose sharply, largely on the back of Sara Lee Corp.’s purchase of the “Senseo” brand of coffee maker that the pair jointly developed.
However, the company said Monday that Europe’s economy is weak and its earnings may only improve in the second half of the year due to cost cutting.
Net profit was €248 million ($327 million), up 80 per cent from €137 million in the same period a year ago. Profit was boosted by a €160 million gain from the Sara Lee deal announced in January, which will see Philips continuing to manufacture the Senseo machines that Sara Lee sells.
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Philips’ revenues rose 6.7 per cent to €5.61 billion, mostly due to a 9 per cent sales increase at its health care equipment arm.
“We remain cautious about the remainder of 2012 given the uncertainties in Europe, particularly in the health care and construction markets, and the slowing growth rate in the global economy,” said Chief Executive Frans van Houten in a statement.
Houten has issued three profit warnings since taking the top job at Philips.
SNS Securities analyst Victor Bareno said the results were “clearly better than expected” and the company’s health care order book appeared strong enough to dispel worries about a new recession in the U.S.
“Lighting appears to be reaching a bottom,” he said.
Shares in Philips, which have lost more than a quarter of their value since November, rose 6.7 per cent to €15.305 in early Amsterdam trading.
Elsewhere, Philips reported that earnings at the lighting division – the company is the world’s largest maker of lights – were hit badly by higher restructuring and raw materials costs. Operating profit at the arm fell from €152 million to €17 million.
At Philips’ consumer products arm – which makes household appliances including toothbrushes and coffee makers – profits rose from €64 million to €175 million.
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