Philips' strong quarter results paves way for continued growth

Philips Electronics has reported a strong increase in its second-quarter earnings, citing growth in its consumer electronics...

Philips Electronics has reported a strong increase in its second-quarter earnings, citing growth in its consumer electronics division and a reduced cost structure, which it said will pave the way for continued growth in the second half of the year.

The company reported second quarter net income of €616m (£410m), compared with income of €42m for the same period a year ago.

Sales for the quarter increased 11% over the same period last year, from €6.53bn to €7.28bn despite the negative effect of the weak US dollar.

The company's consumer electronics division made advances in the quarter, bringing in €53m compared with a loss of €42m last year. The consumer electronics division represents 2.3% of Philips' revenue.

Philip's unconsolidated companies also contributed to its growth, posting net income of €430m during the quarter, compared with a contribution of €108m a year ago.

Contributions from unconsolidated companies included a gain of €99m from InterTrust Technologies, which holds intellectual property for digital rights management (DRM).

InterTrust earlier this year settled a long-running legal dispute with Microsoft over DRM patents, with the software maker agreeing to make a one-time payment of $440m to the company.

Philips president and chief executive officer Gerard Kleisterlee said that the company's second-quarter results showed that it was on its way to sustained profitability, thanks to financial discipline and a refreshed product line.

Scarlet Pruitt writes for IDG News Service

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