Philips Q3 Profit Up, Orders Down; Sees Sales Growth In FY20, Ahead; Stock Up

philips oct19

Shares of Philips Electronics NV were gaining around 2 percent in the morning trade in Amsterdam after the Dutch consumer electronics giant reported Monday higher profit in its third quarter, despite drop in comparable order intake.

Looking ahead, the company said its order book remains solid, even though it continues to see uncertainty and volatility related to the impact of COVID-19 across the world.

For the full year 2020, the company continues to expect to deliver modest comparable sales growth, with an adjusted EBITA margin of around the level of last year.

Further, Philips provided new financial targets for the 2021-2025 period. The company projects an acceleration of the average annual comparable sales growth to 5-6 percent, with all business segments within this range.

For 2021, Philips' current view is that Group comparable sales will deliver low-single-digit growth, driven by solid growth in Diagnosis & Treatment and Personal Health, partly offset by lower Connected Care sales.

Further, the company projects an adjusted EBITA margin improvement of 60-80 basis points on average annually from 2021, reaching the high teens for the Group by 2025.

Regarding the third-quarter results, Frans van Houten, CEO, said, "Driven by the successful conversion of the Connected Care order book for patient monitors and ventilators, and a robust rebound of demand for our Personal Health portfolio, Philips recorded a strong 10 percent comparable sales growth and delivered an Adjusted EBITA margin improvement of 300 basis points to 15.4 percent."

For the third quarter, net income grew to 340 million euros from 208 million euros last year. Earnings per share were 0.37 euro, up from 0.22 euro last year.

Adjusted earnings per share were 0.60 euro, compared to 0.46 euro a year ago.

Philips delivered third-quarter sales of 4.98 billion euros, up 6 percent from last year's 4.70 billion euros.

Comparable order intake, meanwhile, declined 18 percent on a reported basis due to the partial termination of Philips' April 2020 hospital ventilator contract with the U.S. Department of Health and Human Services or HHS. Excluding this, order intake grew 3 percent.

The Connected Care businesses delivered 42 percent comparable sales growth, and Personal Health businesses delivered 6 percent comparable sales growth.

In the quarter, Diagnosis & Treatment businesses generated a low-single-digit comparable sales decline, compared to a high-single-digit decline in the previous quarter.

In Amsterdam, Philips shares were trading at 42.46 euros, up 2.31 percent.

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