Medical Division May Be Philips' Biggest Profit Unit in 2004

The best quarterly profit reported in nearly three years by Royal Philips Electronics (Amsterdam, The Netherlands) was announced on October 14, 2003, by the Dutch technology giant. The company had a third-quarter net profit of 124 million euros, in strong contrast to its net loss in 2002 of 330 million euros. The difference was in large part due to the earnings of its Korean joint venture in liquid crystal display (LCD) monitors.

Philips is expecting its medical division to stimulate growth, and already this division's third-quarter operating profit of 138 million euros has exceeded the operating profit of 124 million euros reported by the lighting division. The medical division produces a wide range of imaging systems, patient monitoring systems, and defibrillators. Currently, this division is facing a slow-down in healthcare spending in Europe that has reduced hospital budgets.

In spite of this, analysts are optimistic about the medical division's long-term prospects. "From a profit point of view, it could become the biggest contributor in 2004,” said Victor Bareno, an analyst with SNS Securities (Amsterdam, The Netherlands).




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