Philips reported profits of €249m (£203m) for the first three months of 2012, up 80 per cent on a year ago.
The Dutch company is the largest electronics manufacturer in Europe and believes that the surge in profits can be attributed in part to significant sales in their healthcare division.
‘We have stepped up our investments in innovation,’ said Philips spokesperson Steve Klink. ‘We have continually renewed our product portfolio to ensure we have continued to grow faster than the market.’
While Philips spent €53m less on R&D for this quarter in comparison to the same quarter last year, Klink maintains that the company is on course to spend equal to or more than the total overall annual R&D spend in 2011.
According to Klink, R&D spend across the whole Philips Group in 2011 was €1.61bn, which accounts for 7-8 per cent of the company’s total sales, at €22.6bn.
While overall sales rose nearly seven per cent to €5.7bn in the first quarter of this year, the company witnessed a decline in their entertainment products, explaining an overall loss across the lifestyle division.
These figures reflect the company’s strategic move to position itself in the healthcare sector. ‘We are moving away from the traditional consumer electronics products towards the health and well being portfolio,’ explained Klink. What’s more, Philips are combining their areas of expertise to develop lighting systems for hospitals that could help patients recover quicker.
‘If you take a look back 10 years ago, Philips was a more of a high volume electronic components company with really big exposure to TVs and other consumer electronics,’ said Klink.
In line with this move towards healthcare technology is the company’s decision to sell 70 per cent of the loss-making television division for €170m to Hong Kong-based screen display company, TPV.
Philips also acquired funds through the sale of real estate at their Eindhoven High Tech Campus. ‘We will still lease some of the buildings back and innovation activities that took place will remain there,’ said Klink. The total proceeds through the sell off that was announced at the end of the quarter are expected to generate €425m.