ELECTRONICS giant Philips, which has a site in Southampton, posted better-than-expected profits after demand rose for items such as flatscreen televisions and mobile phones.

The Dutch company recorded two per cent growth in sales in the first quarter of the year - up to £4.35 billion - despite a slight drop in the UK.

The group said it was now back on a "stable footing" and that it expected the trend to continue through the coming year.

Net profits were £360m in the three months to March 31, compared with

losses of £45m during the same period last year.

Philips, which employs about 3,000 people in the UK, including a site at Millbrook in Southampton, posted growth at all its main units, including lighting, domestic appliances, consumer electronics and medical systems. However, its computer chip unit was still loss-making despite a rise in sales.

The group is Europe's biggest consumer electronics manufacturer and also makes semiconductors for mobile phones.