Philips provides update on its financial performance in Q3 2019
October 10 2019 - 1:00AM
October 10, 2019
Amsterdam, the Netherlands – Royal Philips
(NYSE: PHG, AEX: PHIA), a global leader in health technology, today
provided an update on the third quarter 2019 financial results for
the Group, which will be reported on October 28, 2019.
Group sales for the quarter are expected to amount to
approximately EUR 4.7 billion, reflecting a strong 6% comparable
sales growth with all businesses contributing. Comparable order
intake growth in the quarter is expected to be flat on the back of
strong 11% growth in the third quarter of 2018.
Group Adjusted EBITA for the quarter is expected to be around
EUR 583 million, or 12.4% of sales, compared to 13.2% in Q3 2018.
The continued Adjusted EBITA margin improvement of the Diagnosis
& Treatment and Personal Health businesses was more than offset
by a 4.5 percentage point decline in the Adjusted EBITA margin of
the Connected Care businesses (to 11.3% of sales), and a shortfall
of around EUR 20 million of license income in the segment
Other.
“We continue to see good growth momentum across our businesses,”
said Frans van Houten, CEO of Royal Philips. “However, while I am
pleased with the operational performance improvements in the
Diagnosis & Treatment and Personal Health businesses, it is
disappointing that margins declined in the Connected Care
businesses. This was due to increasing headwinds from tariffs and a
delay in the impact of the mitigating actions, factory
under-coverage as production levels were lowered to reduce
inventory, and an adverse product mix impact. We will drive further
strong mitigating actions to accelerate the improvement in these
businesses.
Philips has delivered three consecutive years of at least 100
basis points annual Adjusted EBITA improvements. Given the overall
significant headwinds and the underperformance of the Connected
Care businesses, we expect that the full year 2019 Adjusted EBITA
margin improvement for the Group will be 10 to 20 basis points. For
2020, we expect to deliver a 4-6% comparable sales growth and an
Adjusted EBITA margin improvement of around 100 basis points.”
Net income from continuing operations is expected to amount to
approximately EUR 210 million in the quarter, which will include a
charge of EUR 78 million related to a goodwill impairment in
Connected Care.
Philips will discuss today’s announcement on a conference call
from 09.30 to 10:00 am CEST, October 10, 2019.
Comparable sales exclude the effect of currency movements and
acquisitions and divestments (changes in consolidation). Philips
believes that comparable sales information enhances understanding
of sales performance; Adjusted EBITA is defined as Income from
operations (EBIT) excluding amortization of acquired intangible
assets, impairment of goodwill and other intangible assets,
restructuring charges, acquisition-related costs and
other one-time charges and gains.
For further information, please
contact:
Steve KlinkPhilips Global Press OfficeTel.: +31 6
10888824E-mail: steve.klink@philips.com
Ksenija GonciarenkoPhilips Investor RelationsTel.: +31 20 59
77222E-mail: ksenija.gonciarenko@philips.com
About Royal PhilipsRoyal Philips (NYSE: PHG,
AEX: PHIA) is a leading health technology company focused on
improving people's health and enabling better outcomes across the
health continuum from healthy living and prevention, to diagnosis,
treatment and home care. Philips leverages advanced technology and
deep clinical and consumer insights to deliver integrated
solutions. Headquartered in the Netherlands, the company is a
leader in diagnostic imaging, image-guided therapy, patient
monitoring and health informatics, as well as in consumer health
and home care. Philips generated 2018 sales of EUR 18.1 billion and
employs approximately 78,000 employees with sales and services in
more than 100 countries. News about Philips can be found at
www.philips.com/newscenter.
Forward-looking statements This release
contains certain forward-looking statements with respect to the
financial condition, results of operations and business of Philips
and certain of the plans and objectives of Philips with respect to
these items. Examples of forward-looking statements include
statements made about the strategy, estimates of sales growth,
future EBITA, future developments in Philips’ organic business and
the completion of acquisitions and divestments. By their nature,
these statements involve risk and uncertainty because they relate
to future events and circumstances and there are many factors that
could cause actual results and developments to differ materially
from those expressed or implied by these statements.
This press release contains inside information within the
meaning of Article 7(1) of the EU Market Abuse Regulation.
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