PHILIPS DELIVERS ON ITS TARGETS: SOLID Q4 WITH 8% COMPARABLE SALES GROWTH AND EBITA OF EUR 865 MILLION.Full-year 2007 comparable sales up 5%, delivering an EBITA margin of 7.7%.

• Comparable sales increased by 8% to EUR 8,365 million, driven by strong growth at Lighting and the consumer businesses, particularly in emerging markets, where sales growth was 18%
• EBITA as a percentage of sales grew by 1.1 percentage points compared to Q4 2006 to reach 10.3%, or EUR 865 million
• Net income amounted to EUR 1,393 million; the increase in earnings was boosted by EUR 1,087 million in gains on the sale of stakes in LG.Philips LCD and TSMC
• The announced acquisitions of Genlyte and Respironics strengthen Philips leadership positions in Lighting and Home Healthcare
• Following an amendment to Dutch tax legislation, the Company announced a further EUR 5 billion (tax-free) share repurchase plan
• It is proposed to increase the dividend for 2007 by 17% to EUR 0.70 per share
• Our Q4 financial performance – and the other progressive steps taken during the quarter – puts Philips well on track to achieve its Vision 2010 goals

Gerard Kleisterlee,President and CEO of Royal Philips Electronics:

"I am pleased to report that in the fourth quarter Philips once again delivered on its targets. Q4's 8% comparable sales growth and 10.3% EBITA margin brought our full-year numbers to 5% for growth and 7.7% for EBITA, meeting, respectively exceeding, our targets for the year thereby sustaining our track record of "saying what we do and doing what we say".

Operationally, we are well-positioned to achieve our Vision 2010 targets. Strategically, the acquisitions of Genlyte and Respironics, together with other important acquisitions of 2007 such as Partners in Lighting and Color Kinetics, will strengthen our portfolio by further building up global leadership positions in promising markets such as LED lighting and home healthcare. Financially, our capital reallocation program gathered pace through the sale of further stakes in LG.Philips LCD and TSMC and the EUR 5 billion share repurchase program we announced in December, which we expect to be largely completed by the end of 2008. We are well on our way to realize our objective of an efficient balance sheet before the end of 2009, further underpinning the achievement of our 2010 objectives.

In 2007, we also continued to invest in strengthening our position in important emerging markets in Asia, Eastern Europe and Latin America. Throughout our businesses, growth in these markets was strong in 2007, with both China and India growing in excess of 20% in the fourth quarter. The healthy geographical spread of our activities, together with our balanced portfolio of professional and consumer businesses, provides Philips with a built-in cushion to help soften the impact of change in established economies.

With our portfolio restructuring nearing completion, delivering on our 2007 objectives puts us in a good starting position to meet the more ambitious medium-term targets set as part of our Vision 2010 strategy, especially as this portfolio of activities has shown resilience in earlier periods of a deteriorating economy. I am confident that we will continue to deliver and that Philips is well geared to sustained profitable growth and increased shareholder value."

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