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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Thomas Haegin who wrote (2116)	2/13/1998 9:44:00 AM
From: Thomas Haegin	Respond to of 9980

Thread, as we were recently speaking of strong Europe and Asian effects and all, I thought you might like to take a look at Phillips results and comments on '97 results. -Thomas Reposted from Reuters: ---------------------------------- Philips profits soar, promises more Reuters Story - February 12, 1998 11:52 ÿÿÿ By Philip Blenkinsop ÿÿÿ EINDHOVEN, Netherlands, Feb 12 (Reuters) - Dutch electronics giant Philips Electronics NVÿ unveiled a jump of over 400 percent in 1997 earnings on Thursday and pledged to continue its drive to rebuild financial credibility after its earnings crash of 1996. ÿÿÿ Net profit from normal operations surged to 3.29 billion guilders ($1.6 billion) from 723 million in 1996, outstripping analysts' estimates of just above three billion guilders. ÿÿÿ Philips said most divisions turned in a strong performance, adding that it expected to show improved earnings for 1998. ÿÿÿ Total 1997 net hit an all-time high of 5.73 billion guilders after a 1996 loss of 590 million, boosted by extraordinary income of 2.44 billion guilders, mainly from the sale of a stake in Taiwan Semiconductor Manufacturing Company. ÿÿÿ In the fourth quarter, Philips turned in a 1.42 billion guilder net profit from normal operations versus an 81 million guilder loss in the fourth quarter of 1996. ÿÿÿ The company raised its 1997 dividend payment to two guilders per share from 1.60. ÿÿÿ Analysts generally gave a positive assessment of Philips' performance. ÿÿÿ "These are excellent results...all divisions have performed about as we had expected. The only division which differed was consumer products, but nothing dramatic," said Stephen Vrolijk at ING Barings. ÿÿÿ He planned to maintain his 'Buy' rating on Philips' shares and expected to raise his 1998 earnings per share estimate. ÿÿÿ "Philips president Cor Boonstra told a news conference: "Our aim was to restore confidence after 1996 and considerable progress has been made on a number of fronts." ÿÿÿ He said Philips' priorities for 1998 were to continue to restore financial credibility and improve its performance. ÿÿÿ "Philips' targets (in 1998)...are to go again for positive cashflow, drive a double-digit earnings growth and come closer to our long-term RONA target," Boonstra said. ÿÿÿ Approximately 65 percent of group businesses currently operated at or above this target of a 24 percent return on net operating capital, he added. ÿÿÿ In addition the company would consider a share buy-back if Dutch tax laws were changed, he said, but he declined to give further details. ÿÿÿ Philips said it would continue its cost cutting drive to improve profitability. "We still see ample room for cost reductions," Boonstra said. ÿÿÿ The company will also invest hundreds of millions of guilders this year on branding and advertising in a campaign to make the Philips name as well known as Coca- Cola or Nike. ÿÿÿ Boonstra said the introduction of the Philips' brand name in the United States, linked to innovative products such as digital video discs (DVD), was being received very positively. ÿÿÿ The planned 40 percent increase in the advertising spend would make up the bulk of a one billion guilder investment aimed at strengthening the backbone of the company, Boonstra said. ÿÿÿ Boonstra said Philips Consumer Communications was losing money but said he saw light at the end of the tunnel: "We think we need six months to bring (PCC) closer to break-even." ÿÿÿ But the firm sounded a note of caution for the first half of the current year, casting a wary eye at Asia and Brazil where it predicted continuing weakness in the early part of the year. ÿÿÿ Philips predicted that weakening local demand would take its toll on Asian markets hit by recent financial turmoil, but it ruled out significant damage to overall earnings. ÿÿÿ Less than four percent of Philips' turnover is in the nations at the centre of Asia's currency crisis - Indonesia, South Korea, Thailand, Malaysia and the Philippines. ÿÿÿ But the Asian prospects of the semiconductors and components businesses were uncertain. ÿÿÿ "What we cannot judge is how our components and semiconductors businesses will be impacted by companies we supply...who will be impacted by the currency situation in that part of the world," Boonstra told Reuters Financial Television. ÿÿÿ As for his own health, Boonstra said he was fighting fit after a hernia problem last year. ÿÿÿ "We have handled this issue once and for all. If you want to go outside and test my strength, I will beat you," Boonstra said in response to a question. ÿÿÿ Rumours have circulated from time to time that Boonstra might leave the company for health reasons and that former Compaq Corpÿ senior vice president Roel Pieper was being groomed as a successor. ÿÿÿ On Thursday, Philips confirmed half the story. Pieper has joined the Philips management board to supervise technology, strategy and planning, but Boonstra will stay at the helm for the foreseeable future. ÿÿÿ "I'm planning to stay for as long as it is necessary to have a stable platform," he said. ÿÿÿ Boonstra added that Pieper's background in computers and information technology did not imply that Philips would veer towards the personal computer industry. ÿÿÿ Net sales for the year climbed to 76.45 billion guilders from 69.20 in 1996. Fourth quarter sales rose to 24.19 billion guilders from 21.41 billion. *** On the Amsterdam Stock Exchange, Philips shares jumped to a session high of 150.50, a gain of almost 10 guilders, before easing back to 141.50 guilders, a gain of just 0.70 on the day. ÿÿÿ This was in line with a general easing of share prices after Royal Dutch/Shell's 1997 results disappointed market expectations. -----End---------