Dutch Philips, Europe's largest consumer electronics group, has made a surprise return to profit after almost two years of losses. Philips reported a net profit of 42m euros ($47m; �28.2m) in April, May and June, while analysts had been expecting a loss.
The firm has successfully implemented a cost-cutting programme, helping disguise the fact that sales are still falling.
The firm's bottom line was also boosted by a sell-off of shares in Vivendi Universal and ASML.
Weak consumer confidence and the Sars virus caused overall sales to fall by 18% during the quarter.
The firm gave a cautious outlook for the rest of 2003, but said it expects its key chip unit to return to profitability in the final three months of the year.
"These figures are good enough to satisfy the markets, but not very inspiring.
"They certainly show that it's no party out there when it comes to the operating environment," said analyst Eric de Graaf at ING bank.
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