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Philips Q4 Results Down, Orders Up; Warns On Weak Comps; Stock Down

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Shares of Philips Electronics NV were losing more than 4 percent in the morning trading in Amsterdam as well as in pre- market activity on the NYSE, after the Dutch consumer electronics giant reported lower profit and sales in its fourth quarter. Comparable sales declined, while comparable order intake increased.

Further, the company maintained its dividend, and said it expects to start the year with a comparable sales decline, followed by a recovery and strong second half of the year.

In the short term, Philips continues to see significant volatility and headwinds related to COVID-19 and supply chain challenges, despite ongoing mitigation efforts. The ongoing Respironics field action following a recall would also impact the results.

Philips Respironics earlier said it expects to remediate a total of approximately 5.2 million registered devices globally following the Respironics recall.

Philips Respironics produced a total of approximately 1.5 million repair kits and replacement devices as of January 12, of which approximately 750,000 have reached customers. The company aims to complete the repair and replacement program in the fourth quarter of 2022.

Further ahead, the company expects to resume its growth and margin expansion trajectory in the course of 2022 based on good customer demand and growing order book.

Frans van Houten, CEO of Royal Philips, said, "For the full year, we target to deliver 5-6 percent comparable sales growth excluding Sleep & Respiratory Care. For the Group, we target 3-5 percent comparable sales growth and a 40-90 basis-points improvement in Adjusted EBITA margin."

The company said it will submit a proposal to the Annual General Meeting of Shareholders, to be held on May 10, 2022, to maintain a distribution of 0.85 euros per share, in cash or shares at the option of the shareholder.

For the fourth quarter, net income attributable to shareholders dropped to 157 million euros or 0.18 euros per share from last year's 603 million euros or 0.66 euros per share

Income from continuing operations were 139 million euros or 0.16 euro per share, down from 508 million euros or 0.55 euro per share a year ago.

The latest results were hurt by an impact of 220 million euros related to the increase in the Respironics field action provision, mainly due to the higher volume of registered devices eligible for remediation, and increased supply costs.

Adjusted income from continuing operations was 0.57 euro per share, compared to 0.83 euro a year earlier.

Adjusted EBITA declined to 647 million euros, or 13.1 percent of sales, from last year's 995 million euros, or 19 percent of sales. Adjusted EBITDA was 905 million euros or 18.3 percent of sales, compared to 1.26 billion euros or 24.1 percent of sales in the previous year.

Sales for the fourth quarter were 4.94 billion euros, down 6 percent from 5.24 billion euros in the previous year.

Comparable sales declined 10 percent. Diagnosis & Treatment businesses' comparable sales were in line with last year. In the Connected Care businesses, comparable sales decreased 32 percent.

The company's comparable order intake, however, grew 4 percent, with a 10 percent rise in the Diagnosis & Treatment businesses, which was partly offset by a 10 percent drop in the Connected Care businesses.

In Amsterdam, Philips shares were trading at 28.14 euros, down 4.25 percent.

In pre-market activity on the NYSE, the shares were losing around 4.05 percent to trade at $31.78.

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