Philips profit jumps 54% thanks to legal win

Electronics giant Philips posted a 57 per cent jump in second quarter net profit yesterday on the back of a major arbitration award, as it warned of volatile markets ahead for the rest of the year.

Net profit surged from €274 million (Dh1.1 billion; $300 million) to €431 million after Philips was awarded €144 million in an international arbitration following a botched deal to sell its entertainment arm to Japan’s Funai electronics company.

Amsterdam-based Philips said total second quarter sales dropped by 2 per cent from €5.97 billion to €5.86 billion year-on-year, but comparable sales was up by 5 per cent in Philips’ core health technology businesses.

Philips in 2014 announced it was selling off its lighting business — a mainstay for more than a century — to focus more on medical equipment. Philips Lighting successfully listed on the Amsterdam stock exchange at the end of May and Philips currently holds a majority 71 per cent share.

Following Philips Lighting’s spin-off, “Philips will now fully focus on capturing exciting opportunities in the health technology space ...,” chief executive Frans van Houten said in a statement.

Van Houten said Philips’ outlook for 2016 “remains unchanged as we expect earning improvements in the second half of the year.”

But he warned: “We are concerned about increased risk due to volatility in a number of markets.”