Philips reports mixed quarterly results

Company expects return to growth and improved profitability in the second half of the year
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Tuesday, April 21, 2020

AMSTERDAM – Philips reported sales of EUR 4.2 billion for the first quarter, a 2% comparable sales decrease.

Income from continuing operations was EUR 42 million, vs. 245 million; and adjusted EBITDA margin was 5.9% of sales vs. 8.8%.

“COVID-19 significantly affected our results in this quarter,” said Frans van Houten, CEO. “There was increased demand for our professional healthcare products and solutions, with comparable sales and order intake growth for the Connected Care and Diagnosis & Treatment businesses. Comparable order intake grew 23%, most notably in diagnostic imaging, hospital ventilators and patient monitors. At the same time, there was a significant decline in demand for our Personal Health portfolio and we saw Image-Guided Therapy procedures trending down as the quarter progressed.”

Philips says the impact of COVID-19 gradually increased in the course of the first quarter, initially affecting its businesses in China and Asia Pacific starting in late January, and subsequently affecting its businesses in the rest of the world from March onward.

As a result, the company expects all geographies to be impacted throughout second quarter and expects “steep revenue decline” for its Personal Health businesses and a “sizable, high-single digit decline” for its Diagnosis & Treatment businesses, partially offset by a significant increase in its Connected Care business.

“Assuming we can convert our existing order book for the Diagnosis & Treatment and Connected Care businesses as planned, elective procedures normalize, and consumer demand gradually improves, we aim to return to growth and improved profitability in the second half of the year,” van Houten said. “Consequently, for the full year 2020 we aim to achieve a modest comparable sales growth and adjusted EBITA margin improvement.”