MUNICH, Germany In the third quarter, sales for NXP declined in the single-digit range. Operating profit, however, more than doubled. Capacity utilization rose and CEO Frans van Houten appeared pleased by the results.
In the third quarter, the company achieved sales of 1.21 billion (about $1.74 billion), 5,5 percent lower than in the same quarter a year ago. In comparison with the second quarter, revenue climbed 6.1 percent. Adjusted by business and currency effects – that is the strong euro versus the dollar -, the company achieved a comparable sequential growth of 7.4 percent.
Operating profit, expressed as EBITA, almost tripled from 56 million in Q3 2006 to 135 million. However, the EBIT figure which normally is used to measure the operating profit, nominally shows a loss of 2 million, caused by purchase price accounting effects. These effects are an accounting consequence of the company's acquisition a year ago and do not reflect the company's true profitability, explained an NXP spokesman.
During the same period, the production utilization rose from 74 percent in the second quarter to 85 percent. The book-to-bill ratio was 1.01, indicating that the order entry was slightly higher than the orders completed.
CEO Frans van Houten said that the results were satisfactory, given the soft business conditions. The company's Mobile and Personal group has successfully integrated the wireless operations of Silicon Labs which was acquired earlier this year. He said the Home Business group has been stabilized and won several new digital TV OEMs as clients with the results to become visible in 2008. In addition, the company's Automotive business gained market share while the Identification business slowed in line with the entire industry, van Houten explained.
For the quarter ahead, the company expects the soft market conditions to continue, with low single digit sales growth.