Philips Down 5% on Disappointing Medical Unit Results

| About: Koninklijke Philips (PHG)

Royal Philips Electronics NV reported third-quarter net income fell more than 90% to €331 million ($469), or €0.30/share, due to a €4.2B gain from the sale of a majority stake in its semiconductor division last year. The decline was mostly expected among analysts. However, earnings before interest, tax and amortization [EBITA] of €438M beat expectations of €423M. Net sales rose 3.3% to €6.52B, with operating margin coming in at 5.9%. Results from Philips' medical systems division were a disappointment, but were offset by strength in its other core businesses. Medical systems sales increased only 1.6% to €1.6B, while its operating profit fell 9% to €151M and margin of 9.4% missed analysts' average forecast of 11.2%. Operating profit jumped 40% at its domestic appliance and personal care [DAP] and lighting divisions (to €132M and €178M, respectively) and rose 26% to €34M at its consumer electronics unit. On a conference call, CFO Pierre-Jean Sivignon said the company will meet its target of overall operating profit growth of 7.5% for the year. (Check later for Philips' earnings call transcript). Ordinary shares of Philips Electronics were last down 5% to €30.51 in late morning trading in Amsterdam. Philips' ADRs gained 0.9% to $45.41 on Friday.

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