Philips cautiously bullish on CE future

Ailing Dutch electronics giant Philips is projecting profits equivalent to 3% to 4% of operational turnover for its Consumer Electronics (CE) division within the next three years.

Based on 1992 turnover of 22 billion guilders ($ 11.5 billion), this will amount to gross profits of $ 315 million to $ 420 million over the period, according to the CE division’s chairman, Henk Bodt.

CE, formerly a profit center for Philips, but ravaged by a flat world market over the past two years, recorded net losses of $ 260 million last year. In the first six months of 1993, CE posted losses of $ 79 million, equivalent to 1.5% of Philips’ total turnover.

Bodt says it will be back in profit “in the course of 1994,” which, given losses in recent years “would be a substantial improvement.”

Bodt says the modest 3%-4% profit target in three years’ time was the best the division could hope for “under present circumstances. … We will never return to the gross margins of the past.”

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