Tighter purse leads Philips back to black

EINDHOVEN, Netherlands — Cost-cutting and stringent debt control have been cited as key factors in a return to profit for the Dutch electronics giant Philips following three loss-plagued years.

Philips announced Thursday that its 1993 net profits, including an extraordinary gain of $ 1.11 billion guilders ($ 567 million), surged to $ 1.02 billion from a 1992 loss of $ 464 million.

Philips chairman Jan Timmer remained cautious on 1994 prospects.

Particular problems remain in Germany. There, losses worth millions of guilders recorded by Philips’ audio subsidiary Grundig depressed the performance of the consumer electronics unit.

Earnings from operations improved in most areas. The company reduced its debt by almost half to $ 4.43 billion.

Philips’ shares gained $ 2.25 to a high of $ 27 on the New York Stock Exchange. The company paid a token 26 cents dividend, its first since 1989.

As regards future expansion, Timmer said Philips will “step with caution” into the burgeoning field of multimedia and telecommunications. It has set up a new media division to pursue software production for CD-I, multimedia system development and an expansion of cable interests.

Timmer said Philips’ new joint venture with United Intl. Holdings Inc. of Denver to own, develop and operate European multichannel cable networks will provide “an important inroad” into a growing market. A Philips/United company will be launched in the second half of this year and effectively become Europe’s largest privately owned, multichannel subscription.

“We have the feeling that we have reached an important milestone and can slowly begin revitalizing the company,” said Timmer, who launched a bruising restructuring program in 1990.