Dutch electronics giant Koninklijke Philips Electronics NV reported Monday a drop in fourth-quarter profit due to one-off charges.
Net income in the fourth quarter fell to ?332 million (US$393 million on Dec. 31, the last day in the period being reported) from ?498 million in the same period the year before, in accordance with U.S. generally accepted accounting principles (GAAP), the Amsterdam manufacturer said in a statement.
One-off charges included ?458 million in costs related to LG.Philips LCD Co. Ltd. and a ?240 million tax payment linked to transferring its stake in contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC).
Fourth-quarter sales rose 6 percent to ?9.52 billion from ?8.95 billion a year earlier. The group's medical systems, semiconductor and consumer electronics divisions contributed to the comparable sales growth.
At the semiconductor unit, fourth-quarter sales rose 9 percent to ?1.33 billion from ?1.12 billion the year before.
"We grew everywhere in semiconductors but mobile and home digital were key growth drivers and automotive was also strong," Philips Chief Financial Officer (CFO) Pierre-Jean Sivignon, in a conference call with analysts.
In December, Philips announced plans to separate its chip manufacturing operations, in a move that could see the unit merge with a rival.
Geographically, the company was able to increase sales everywhere except Europe, where sales fell 1 percent. Sales in North America rose 9 percent to ?2.38 billion and in Asia they increased 8 percent to ?2.40 billion. The decline in sales in Western Europe was largely due to the semiconductor business, which has shifted to Asia, Sivignon said.
Sales in the Dutch manufacturer's core consumer electronics business grew 6 percent to ?3.47 billion in the fourth quarter from ?3.34 billion the year before. The unit benefited, in particular, from strong demand for flat displays.
In 2005, Philips posted net income of ?2.87 billion, compared to ?2.84 billion the year before. Full-year sales grew 4 percent to ?30.4 billion from ?29.35 billion a year earlier.
For 2006, Sivignon said Philips is sticking to its projected sales growth of between 5 percent and 6 percent.