Philips - Philips beats forecasts, raises dividend

Philips beats forecasts, raises dividend
AMSTERDAM, Jan 23 (Reuters) - Philips Electronics (PHG.AS: Quote, Profile, Research) reported an above-forecast fourth-quarter net profit of 332 million euros ($401.3 million) on Monday that was pushed higher by stronger core operations, but reduced by one-off charges.
Europe's biggest consumer electronics group's net profit compared with an average forecast of 224 million euros, after exceptional charges, in a Reuters poll of 12 analysts. Net profit in the year-earlier period was 498 million euros.
The world's biggest lighting maker, a top three hospital equipment maker and Europe's number three in semiconductors raised its proposed dividend by 4 cents to 0.44 euros.
It is the second consecutive rise now that the once erratically performing firm is steadily generating cash from operations and divestments of non-core units.
Operating income from its five core operations came in at 971 million euros against an average analyst expectation of 772 million euros. Philips singled out sales of new models of shavers, budget espresso machines, flat televisions and chips for mobile phones as contributing to the good quarter.
The year-earlier profit from operations of just 14 million euros was hit by write-downs at its medical systems division.
"On the back of a strong product line-up, we accelerated growth and increased profitability. We gained some good momentum this year, and are confident of meeting our targets," Chief Executive Gerard Kleisterlee said in a statement.
Philips has a target of reaching an operating profit margin of 7 to 10 percent of revenues by the end of 2006. It aims to grow by 5 to 6 percent annually.
Revenue also rose faster than expected in the quarter, by 6 percent to 9.52 billion euros, compared with an average analyst forecast of 9.36 billion euros.
BEATING FORECASTS
The company which co-invented the compact disc with Sony Corp (6758.T: Quote, Profile, Research) from Japan is now steering away from consumer electronics and chips, and focusing on higher profits in medical systems, domestic appliances and lighting.
Ironically, however, sales growth was driven by chips and consumer electronics in the fourth quarter. Its U.S. operations, long a source of concern, grew comparable revenues by 9 percent from the year-earlier quarter on the back of flat televisions. Revenues in its European home market slipped by 1 percent.
Analysts were largely pleased with the results.
"Revenue was higher than expected but a number of charges distort the picture. Still, if you exclude that, the numbers are better than expected. The guidance for growth in general is good," analyst Eric de Graaf at Petercam said.
One-off charges included 458 million euros for cutting all ties with its cathode ray tubes venture, LG.Philips Displays, and higher taxes after a 240 million euro tax charge related to its stake in Taiwan contract chip maker TSMC (2330.TW: Quote, Profile, Research)
Philips shares have risen 20 percent since it published third-quarter results in which it set its 2006 profit target and when it provided the first signs of a return to growth. The company is valued by the market at 33.4 billion euros.
The results follow strong fourth-quarter earnings from South Korean rival Samsung Electronics (005930.KS: Quote, Profile, Research) , which benefited from soaring demand for flat screens and chips used in mobile phones and MP3 players.