Philips Electronics reported better than expected third-quarter results on Monday, boosting its share price as the benefits of its cost-cutting program took effect, but the company said it had still not seen a recovery in most of its markets.
The world's biggest lighting maker, in the top three for hospital equipment and Europe's biggest consumer electronics producer, said sales fell a comparable 11 percent on a year ago to 5.6 billion euros.
But earnings before interest, tax and amortization (EBITA) jumped to 344 million euros ($507 million) from 57 million euros in the same quarter last year, beating the average forecast of 109 million euros given in a Reuters poll of analysts as the effects of cost cutting kicked in.
The drop in sales was also not as bad as expected, analysts said, although an outright recovery was not in evidence.
We remain cautious about the short-term outlook in the absence of structural recovery in the majority of our end-markets, Chief Financial Officer Pierre-Jean Sivignon told reporters.
The remarks echo comments made by competitors General Electric and Siemens that underlying recovery had not yet begun.
Philips said last month it saw some early signs of consumer confidence stabilizing but Sivignon said visibility in its consumer markets was still very difficult.
The proof in the pudding will be the selling season, Sivignon said. This is the moment that we can actually see if consumers are there, adding that the moment of truth would be Thanksgiving and Christmas.
Hopes for a return of the consumer to the market are high but the jury is still out, experts say.
SHARES HIT NEW HIGH
Philips shares were up 6.1 percent at 18.06 euros by 0931 GMT when the Amsterdam blue chip index <.AEX> was up 1.6 percent.
The results look excellent, Petercam analyst Eric de Graaf said. There are more positive one-offs than expected, but even before these items the results look good.
He said cost cutting paid off particularly in the consumer lifestyle unit, which makes products ranging from MP3 players and digital photo frames to water kettles, toasters and shavers, noting that the market was still weak.
EBITA at the consumer lifestyle unit rose to 129 million euros from 63 million last year, beating average analyst expectations of 38 million euros.
Philips is in the process of cutting 6,000 jobs this year to cope with the recession and said all measures were in place to realize cost savings of 600 million euros next year.
(Editing by Greg Mahlich)