Philips Q2 Net Profit Down, Comparable Sales Up; Backs 2017-2020 View

Dutch consumer electronics giant Philips Electronics NV (PHGFF.PK,PHG) reported Monday a sharp drop in second-quarter profit mainly reflecting loss from discontinued operations. On a continuing operations basis, profit climbed with higher margin, even as sales were nearly flat. Comparable sales and orders increased driven by growth and productivity programs.

Looking ahead, Frans van Houten, CEO, said, “we reiterate our targets for the 2017-2020 period of 4-6 percent comparable sales growth and an average annual 100 basis points improvement in Adjusted EBITA margin.”

For the second quarter, net income was 2 million euros, compared to 289 million euros a year ago. Earnings per share were breakeven, compared to earnings of 0.27 euro a year ago.

Discontinued operations mainly included a net loss of 177 million euros related to Philips’ retained interest in Signify, formerly Philips Lighting.

Net income from continuing operations was 186 million euros or 0.30 euro per share, higher than prior year’s 161 million euros or 0.20 euro per share.

Income from operations or EBIT increased to 298 million euros from 252 million euros last year. EBIT margin improved to 6.9 percent from 5.9 percent last year.

EBITA margin increased by 230 basis points. Adjusted EBITA margin improved by 100 basis points to 11.2 percent of sales.

In the quarter, aAdjusted EBITDA improved by 50 million euros and the margin increased by 120 basis points.

Sales in the quarter were 4.288 billion euros, slightly lower than prior year’s 4.294 billion euros. Comparable sales growth was 4 percent, reflecting high-single-digit growth in the Diagnosis & Treatment businesses and low single-digit growth in the Connected Care & Health Informatics businesses and the Personal Health businesses.

Sales in growth geographies increased 6 percent on a comparable basis, with good growth in Middle East & Turkey, Latin America and China. In mature geographies, sales increased 3 percent on a comparable basis, reflecting growth in North America and Western Europe, as well as other mature geographies.

Comparable order intake increased 9 percent with mid single-digit growth in growth geographies and double-digit growth in mature geographies.

Going ahead, Philips said it is on track to deliver annual savings of 400 million euros in 2018.

by RTTNews Staff Writer

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