Philips bounces back into the black

EUROPE'S biggest consumer electronics group, Philips, has pleased investors with a surprise bounce back into the black. The Dutch group said the worst slump in recent history was behind it and promised a full-year profit this year after last year's e2.6bn (£1.6bn) deficit. Analysts had predicted a loss of more than e200m.

Philips warned two months ago that there were no quick fixes as it unveiled plans to shed 12,000 jobs.

Higher margins, improved results from unconsolidated companies and savings were behind the first-quarter profit of e9m. Sales in the three months to March fell 7% to e7.6bn, from e8.2bn a year earlier.

Philips, the world's third-largest computer chip maker, said it expected further improvement in those operations. But it warned it faced another writedown on its stake in French media giant Vivendi Universal. Philips owns 4% of Vivendi, which has almost halved in value this year.

Chief executive Gerard Kleisterlee said: 'It seems the worst slump in recent business history is behind us now, and that we are beginning to see the start of a new upturn in the business cycle.'