Energy-saving bulbs light up Philips results

David Gow in Brussels guardian.co.uk, Monday July 14, 2008

Philips, the Dutch electronics group, today reported strong growth in pre-tax profits in the second quarter on the back of surging sales and earnings in energy-saving light bulbs.

The world's biggest lighting company said pre-tax profits rose 7% from €386m (£308m) to €413m on sales up 6% to €6.5bn. Net income more than halved from a year ago on a series of extraordinary items from €1.6bn to €720m.

Pierre-Jean Sivignon, chief financial officer, said sales of lighting - and TV sets - were particularly strong in emerging markets such as Latin America and India. They grew 16% in the quarter.

Energy-saving systems increased sales by 16%, with the strongest growth again coming in emerging markets, which offset some softening in Europe and the US. Overall lighting sales were up 6%.

The surge in energy prices across the globe is prompting consumers to switch to more efficient, longer-lasting lighting. In the EU growth has been hampered by a continuing dispute over duties on energy-saving bulbs imported from China - many of them made by European groups such as Philips and Osram, owned by Siemens.

Philips' share price rose 7.6% in early trading, helping the stock regain some of the 30% it has lost this year. The shares drooped badly on Friday on fears the group would announce depressed profits and poor sales prospects in the face of the economic downturn.

Gerard Kleisterlee, chief executive, said the group's portfolio had held up robustly in a rapidly deteriorating economic environment. Sivignon added that emerging markets were helping to balance the weaker demand in the west.