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Philips’ Annual Results 2006


Monday, January 22, 2007

Philips reports strong Q4 with net income of EUR 680 million; proposes to increase dividend to EUR 0.60 per share

* Fourth-quarter sales up 2% comparably to EUR 8,128 million, bringing full-year sales to EUR 26,976 million, comparably up 6% on 2005
* Fourth-quarter net income increased to EUR 680 million from EUR 332 million in Q4 2005, bringing full-year net income to EUR 5,383 million, compared with EUR 2,868 million in 2005
* Philips announced and/or completed seven strategically aligned acquisitions in 2006 that will add to further growth
* Continuation of the share repurchase program brings total cash returned to shareholders in 2006 to over EUR 3.3 billion
* Proposal to increase the dividend for 2006 significantly to EUR 0.60 from EUR 0.44 in 2005

Gerard Kleisterlee, Philips’ President and CEO of Royal Philips Electronics:

“Strong results in the fourth quarter rounded out what was a busy and successful year for Philips. A combination of strategically aligned acquisitions and the divestment of cyclical components businesses – not least the sale of a majority stake in Semiconductors – have made us a less volatile, more brand-driven company.

I’m very pleased to see that our 2006 performance validates the key strategic decisions we have made. In the fourth quarter alone, our Medical Systems division brought in EUR 311 million in EBIT, which amounts to a margin of 15%. Our Consumer Electronics division was able to post a full-year EBIT margin of 3.9%, amid tough market conditions. This again demonstrates the robustness of our CE business model.

In a landmark transaction, we sold a majority stake in our Semiconductors division in September, which made our earnings less volatile. This transaction completed efforts to transform Philips into a stable company built around our brand, with leading market positions in virtually all areas in which it is active.

2006 also saw the redistribution of over EUR 3.3 billion to shareholders by way of our ongoing share repurchase program and dividends. We intend to buy back a further EUR 1.6 billion of shares in 2007, in line with our earlier commitment.

As we close the book on 2006, it’s clear that we are entering a new period in the Company’s history. I am confident we will be able to continue to deliver sustainable growth and improved profitability in our key business areas of healthcare, lifestyle and technology.

Organic growth is strong and consistent where it matters most, i.e. in our high-margin activities, driven by innovation and an ever-stronger brand. Growth is further fuelled by the seven acquisitions we have announced which, as far as completed, are all performing at or above the level expected. At the same time we have practically completed the divestment of cyclical components activities.

Heading into 2007, we will continue to deliver on our promise to achieve sustainable value creation by strengthening our existing base of operations, making acquisitions where value creation is possible and returning capital to shareholders. At the same time, we will deepen and extend our commitment to our “sense and simplicity” brand promise. I am deeply convinced that our company is well positioned for an excellent future.”

Financial report
* 2006 - Fourth Quarterly Report:

Audio webcast

The fourth quarter results conference call with Pierre-Jean Sivignon, CFO, will start at 09:15 CET. Replay will be made available via audio webcast at approximately 12:30 CET and will be available for a year.

* Fourth quarter results 2006 conference call:
* 2006 - Presentation Fourth Quarter:

Video webcast

The 2006 Annual Results press conference will start at 11:00 CET on January 22, 2007 and will be made available via video webcast. When opening the video webcast for the first time, please wait while the program automatically selects the most suitable bandwidth for your computer.

* 2006 - Annual Results Video Webcast:
* 2006 - Annual Results presentation:

The audio of the presentation will be available for download in MP3 format as from 01:00 pm CET.

* Click here to download the Annual Results 2006 press conference audio in MP3 format (22.6 MB):

More information:

About Royal Philips Electronics

Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in healthcare, lifestyle and technology, delivering products, services and solutions through the brand promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately 121,700 employees in more than 60 countries worldwide. With sales of EUR 27.0 billion in 2006, the company is a market leader in medical diagnostic imaging and patient monitoring systems, energy efficient lighting solutions, personal care and home appliances, as well as consumer electronics. News from Philips is located at

Forward-looking statements

This release may contain certain forward-looking statements with respect to the financial condition, results of operations and business of Philips and certain of the plans and objectives of Philips with respect to these items. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.


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