Royal Philips Electronics NV, Europe’s biggest consumer-electronics maker, unexpectedly posted a profit in the third quarter as operating earnings at the consumer unit more than doubled.

Third-quarter net income was 174 million euros ($256 million), or 19 cents a share, from 57 million euros, or 6 cents, in the year-earlier period, the Amsterdam-based company said today. Analysts had predicted a loss of 44.7 million euros, the average of 13 estimates compiled by Bloomberg.
Operating profit at the consumer unit, which makes Senseo coffee machines and flat-screen televisions, more than doubled to 129 million euros after cutting jobs.
Chief Executive Officer Gerard Kleisterlee in July raised his annual cost- saving estimate to more than 600 million euros from 500 million euros. At the time, Kleisterlee, who is eliminating 6,000 jobs, said he would cut expenses further if needed.
“TV is almost break even and it has been quite a bleeder,” said Victor Bareno, an analyst at SNS Securities in Amsterdam, who put his “reduce” rating under review. “The cost reductions and restructurings are having a substantial and positive impact.”
The television unit’s operating loss was 26 million euros compared with 73 million euros a year earlier.
Philips shares have gained 23 percent this year, compared with a 28 percent increase of Amsterdam’s benchmark AEX Index.
The company has seen “a stabilization of the consumer sentiment,” Philips Chief Financial Officer Pierre-Jean Sivignon said in a Bloomberg Television interview today. “The proof of the pudding will be in the upcoming selling season, Christmas and Thanksgiving, and we have to see how that actually works out in the weeks to come,” he said.
Sales fell to 5.6 billion euros from 6.33 billion euros, beating the 5.45 billion euros average estimate of the 20 analysts surveyed. Earnings before interest, taxes and amortization increased to 344 million euros from 57 million euros in the year-earlier period.
Revenue at the consumer lifestyle division, which includes the coffee-machine and television business, declined 20 percent from a year earlier to 2.07 billion euros.
Sales at the health-care unit, the world’s largest maker of patient-monitoring systems, rose 1 percent to 1.82 billion euros, while the lighting unit’s sales declined 11 percent to 1.65 billion euros.
(Source: Bloomberg)