PARIS Consumer electronics giant Philips said Monday (Jan. 23) annual sales grew 4 percent to 30.4 billion euros ($36.7 million) in 2005 as a result of the strong sales of flat-panel TVs and the recovery of the semiconductor market cycle.
Philips said it also continues to plan for a possible merger involving its chip unit.
Separately, Philips reported fourth-quarter net profit of 332 million euros ($401 million). The Dutch company beat fourth-quarter profit and sales forecasts despite one-off charges. Philips also raised its dividend the second year in a row.
All five operating divisions medical systems, domestic appliances and personal care products, consumer electronics, lighting and semiconductors helped boost sales growth.
CFO Pierre-Jean Sivignon called the medical unit "Philips’ fastest growing portfolio." It registered annual sales of 6.34 billion euros ($7.66 billion), an 8-percent jump. Annual consumer electronics sales grew by 5 percent to 10.4 billion euros ($12.58 billion), due to the strong sales for flat screen TVs.
Annual sales for the semiconductor unit rose a modest 3 percent on sales of 4.62 billion euros ($5.58 billion).
According to Philips President and CEO Gerard Kleisterlee, "The semiconductor cycle has finally begun to pick up in the second half of 2005." The chip unit grew by 3 percent despite flat business in the first half of 2005.
Kleisterlee called 2005 “eventually a good year,” stressing that the company’s fundamentals are solid and it is striving to grow "predictably."
Based on that strategy, Philips is shifting its focus more to medical, appliances and lighting. Meanwhile it’s in the process of separating its semiconductor business unit.
While planning continues to merge or spin off its chip unit, Kleisterlee said Philips is proceeding with the external work of "talking our partners in the industry." Declining to elaborate, Kleisterlee did say, "We’ve kept all the options open. We are not excluding anyone. The options range from merger and acquisition, IPO and sales of a few specific businesses.”
The point of separating its chip division is "to increase flexibility and achieve the scale necessary for the semiconductor business," Kleisterlee explained. "Our strategy is to strengthen our semiconductor business, ranging from mobile, automotive to home and multi-product market, working with partners possessing "complementary strengths," he added.
Asked about possible merger partners in Asia, Kleisterlee said growing Asian companies lack strength "across the spectrum" of technology and products sought by Philips.
It has already divested of several "non-core units," including mobile displays, optical pick-ups, aerospace, automotive and business communications.
Several acquisitions are planned for the medical systems unit. Medical equipment orders rose 24 percent last year, and a 6-percent growth rate is forecast for 2006.
Other 2005 charges included ending a cathode-ray tube venture with LG.Philips Displays and a cutting its stake in Taiwan Semiconductor Manufacturing Co.