The ratings on The Netherlands-based diversified technology group Koninklijke Philips Electronics N.V. (Philips) reflect improvements in the group's business risk profile and its solid consolidated financial performance, leading to modest financial risk and improved underlying profitability. The ratings also reflect Philips' diversified portfolio. Total debt at Dec. 31, 2005, adjusted for leases, pensions, and credit-related guarantees, was €5.8 billion. Over the 12 months to Dec. 31, 2005, Philips posted good performance in underlying combined profitability at its five main divisions, excluding unallocated activities. This was boosted by good margin development in all of its divisions in the fourth quarter of 2005 and good performance at the consumer electronics mainstream business (excluding licenses), which benefited from the effects of the division's
