AMSTERDAM: Philips on Monday reported better-than-expected quarterly profits on cost cutting and strong orders for its US healthcare business, but said the sale of its Lumileds division, worth US$3.3 billion, is in doubt.
The Dutch company said the sale of Lumileds, which makes automotive lights and LED components, to a consortium of mostly Chinese investors had run into unexpected opposition from the US government.
Third-quarter net income swung to a profit of 324 million euros from a loss of 103 million euros in the same period a year earlier while sales were up 2% to 5.80 billion euros from the same period a year earlier. In the third quarter of 2014 Philips booked losses related to the temporary closure of a factory in Cleveland, Ohio.
Analysts polled by Thomson Reuters had expected net profit of 191 million euros and sales of 5.80 billion euros.
Philips repeated its full-year guidance for "modest" sales growth and an improved operating profit in 2015.
Philips announced in March it would sell 80.1% of the Lumileds business to Go Scale Capital, an investment fund run by GSR Ventures and Oak Investment Partners. But the Dutch company said on Monday the Committee on Foreign Investment in the United States (CFIUS) had expressed "certain unforeseen concerns" about the deal. It did immediately say what those concerns were.
"Philips and Go Scale Capital will continue to engage with CFIUS and will take all reasonable steps to address its concerns, but given these, the closing of the transaction is uncertain," Philips said.
Most of Lumileds' sales and profits come from its automotive components business, but it also includes LED production and a large portfolio of LED patents. Investors in Go Scale include GSR Capital, Nanchang Industrial Group, and Asia Pacific Resource Development, all based in China.
Philips said the rest of its lighting business - which is the world's largest maker of lights - is still on track for an initial public offering or sale in 2016. - Reuters
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