Europe's biggest consumer electronics, lighting and computer chips company, Philips Electronics, has delivered a promised turnaround.

The Dutch giant has reported a 9m euro (�5.5m; $7.9m) profit for the first three months of 2002, having bounced back from its 2.6bn euro loss in 2001.

Sales during the January to March period reached 7.6bn.

Philips has pushed through harsh cost cutting measures to achieve the financial recovery.

The result surprised analysts who had expected a 200m euro loss.

Chip demand

The group said it was optimistic about the future and predicted an economic upturn for its computer chip and components subsidiaries.

During the first three months of the year, the Philips semiconductor unit saw sales rise 7% compared with the last three months of 2001.

The sales were boosted by rising demand for chips used in displays and in consumer electronics.

Cost cutting

Philips has undergone a painful restructuring in recent months.

It has been selling dozens of businesses and its research and development spending has been slashed.

Philips has also told its 210,000 workers that at least 11,000 jobs would be lost.

Other moves include the pulling out of mobile phone handset production, outsourcing the business to a cheaper manufacturer.