Philips' First Quarter Results 2004

Tuesday, April 13, 2004

Philips reports net profit of EUR 550 million in first quarter

• Nominal sales growth of 2% - comparable sales up 8% driven by Semiconductors and Consumer Electronics
• Income from operations EUR 218 million
• Unconsolidated companies contributed EUR 457 million to net income - this included EUR 156 million for a gain related to Atos Origin
• Cash flow from operating activities of EUR 404 million
• Net debt : group equity ratio 18 : 82

Philips recorded a net income of EUR 550 million (a profit of EUR 0.43 per share) versus a loss of EUR 69 million (a loss of EUR 0.05 per share) in the same period last year.

Nominal sales amounted to EUR 6,631 million and increased by 2% over the same period last year. Weaker US dollar and dollar-related currencies had a downward effect of 7%, while various consolidations had a 1% upward effect. Comparable sales increased by 8%, predominantly driven by strong sales growth at Semiconductors and Consumer Electronics. Sales growth at Medical Systems was also solid.

Income from operations was a profit of EUR 218 million, an increase compared to Q1 2003 of EUR 186 million. The main increase came from improved performance at Semiconductors, supported by higher sales, improved margins, and the benefits of earlier restructurings.

Unconsolidated companies contributed EUR 457 million to net income; an improvement of EUR 481 million over Q1 2003. Contributing to these improved results was a dilution gain of EUR 156 million on Philips' participation in Atos Origin. Results from LG.Philips LCD were EUR 215 million; an increase of EUR 232 million, driven by much higher sales volumes and increased panel prices.

Cash flow from operating activities was an inflow of EUR 404 million. In Q1 2003, cash flow from operating activities was an outflow of EUR 205 million. Inventories as a percentage of sales was 12.1%, which was exactly the same as at the end of Q1 2003.