Philips’ Second Quarter Results 2007

Monday, July 16, 2007

Philips reports 34% growth in EBITA

Net income increases to EUR 1,569 million

* EBITA amounted to EUR 389 million, or 6.4% of sales, compared with EUR 290 million, or 4.5% of sales, in Q2 2006.
* Including a EUR 1,220 million gain on the sale of TSMC shares, net income increased to EUR 1,569 million from EUR 301 million in Q2 2006.
* Sales totaled EUR 6,100 million, in line with Q2 2006 on a comparable basis; 7% growth at the high-margin divisions.
* Reallocation of capital continued with the sale of a further stake in TSMC, additional share repurchases and the announcement or completion of several acquisitions, including Color Kinetics.

Gerard Kleisterlee, President and CEO of Royal Philips Electronics:

“It is good to see that Philips continued to increase its profitability in a quarter that, from a revenue perspective, turned out to be as challenging as we had anticipated. I am pleased with our year-over-year EBITA improvement of more than 30% to EUR 389 million.



It is encouraging to see that the increase in profitability we achieved was driven over a broad front – lower central costs and improved results at our high margin businesses, based on their strong market positions and the overall strength of our business models.



Sales at Medical Systems were impacted in the USA by the effect of the Deficit Reduction Act, but everywhere else showed robust growth with order intake also picking up to a very good level for the quarter.



We are increasingly benefiting from our leadership position in the shift to energy-efficient lighting solutions, both in the professional and consumer domain, and will further add to our strength in LED lighting, a fast-growing new segment in the lighting market, not least through our recently-announced intention to acquire Color Kinetics.



Sales in our consumer businesses were negatively impacted by the phase-out of existing product lines ahead of the effect, in the coming months, of the introduction of new, exciting products across a wide range of market segments.



All in all, our first-half-year performance has provided us with a solid basis for another good year and gives us confidence with respect to the achievement of our targets.



Our reallocation of capital is also in full swing with a continuous deal flow in our second trading line for share buy-backs and a good acquisition pipeline to further strengthen our market position in high-margin businesses.”

Financial report
* 2007 - Second Quarterly Report: www.quarterlyresults.philips.com/files/R_2Q07.pdf?Int_origin=Q22007

Presentation
* 2007 - Presentation Second Quarter: www.quarterlyresults.philips.com/files/presentation_2Q07.pdf?Int_origin=Q22007


Audio webcast

The second quarter results conference call with Pierre-Jean Sivignon, CFO, will start at 10:00 am CET. Replay will be made available via audio webcast at approximately 12:30 pm CET and will be available for a year.

* Second Quarter Results 2007 Conference Call: www.philips.com/mt/cc/q22007results/audiowebcast

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 125,800 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 www.philips.com/newscenter.

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.

Contact Information

Arent Jan Hesselink

Philips Corporate Communications

Royal Philips Electronics

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