Philips 2Q profit up sharply

AMSTERDAM, Netherlands - Royal Philips Electronics NV, a maker of medical and lighting equipment, said Monday net profit for the second quarter rose on the sale of its stake in a Taiwanese semiconductor company, but that exchange rates hurt sales.

Net profit was 1.57 billion euros ($2.16 billion), up from 301 million euros a year earlier, while sales fell 4.4 percent to 6.10 billion euros ($8.40 billion) from 6.38 billion euros.

The company blamed the fall in sales on unfavorable exchange rates and said they would otherwise have been comparable with a year earlier.

Most notable was an 11 percent fall in sales at the company's consumer electronics division to 2.15 billion euros ($2.96 billion).

Chief Financial Officer Pierre-Jean Sivignon still forecast a rise in consumer electronics sales in the second half of the year, due to the introduction of new products, including a new range of flat panel televisions.

Excluding the 1.22 billion euros ($1.68 billion) gain on the sale of a 4.7 percent stake in Taiwan Semiconductor Manufacturing Company Ltd, operating profit rose 22 percent, mostly from less overhead.

Consumer electronics remains Philips' best-known and largest division by sales but with an operating profit of 1 percent, or 21 million euros ($29 million) in the second quarter, it is dwarfed by the profitable medical and lighting businesses. These businesses posted second-quarter operating profit of 151 million euros ($208 million) and 150 million euros, respectively.

"Philips continued to measure growth where it matters most: in our high-margin divisions," Sivignon said.

However, growth in the division continues to suffer from cutbacks to spending in U.S. Medicare and Medicaid programs, Philips said.

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