Philips Q2 Sales Up 9% On Chinese Healthcare Spending

Philips Q2 Sales Up 9% On Chinese Healthcare Spending
July 24, 2019


Shares of Koninklijke Philips N.V. (NYSE: PHG, PHGFF.PK) has gained roughly 7.50% or $3.50 in the past two days to trade at $47.29 after reporting higher-than-anticipated comparable sales in the second quarter. The Dutch health technology company generated a major portion of its revenue from the sales of its hospital equipment in the US and China markets. The company also reported higher profit and revenue in 2Q19, with narrower loss from discontinued operations.

Amsterdam headquartered Philips reported second-quarter sales of €4.67 billion, up 9% from €4.29 billion in the similar quarter last year. On a comparable basis, sales grew 6% with mid-single-digit growth in all business divisions.

Net income for the second-quarter was €246 million, up from €2 million last year. On a per-share basis, earnings were €0.27 in the recent quarter, compared with break-even in the year-ago period. The 2Q19 results include loss of €13 million from discontinued operations, compared with the prior year’s loss to €184 million.

Income from continuing operations rose to €260 million, or €0.28 per share, in Q2 2019, from €186 million, €0.20 per share, in the corresponding quarter last year.

Adjusted income from continuing operations was €0.43 per share, while adjusted EBITA margin was 11.8% of sales, compared with 11.2% in the similar period last year. Better performance of Diagnosis & Treatment division, in spite of unfavorable currency and tariff effect, led the margin growth.

Philips also revealed that comparable sales increased 6% in 2Q19. Analysts had anticipated 4.5% increase in comparable sales.

During the June quarter, sales in growth regions rose 9% on a comparable basis, led by double-digit growth in China. In developed regions, sales grew 5%. The company also reported 8% growth in comparable order, aided by the sustained demand for innovative products in Diagnosis & Treatment division, in spite of sluggishness in Connected Care division.

Commenting on the results, CEO Frans van Houten said, “We saw growth in all our segments in the second quarter and we expect that to continue. We had strong traction in emerging markets and that is set to continue. Also, we expect mature markets to come in stronger in the second half of the year.”

Going forward, the company anticipates to record 4% to 6% of comparable sales growth and adjusted EBITA margin increase of 100 basis point per year (on average) until 2020.

Van Houten said, “We continue to expect our performance momentum to further improve in the second half of the year, supported by sales growth and our productivity programs. We maintain our overall targets of 4-6 percent comparable sales growth and an Adjusted EBITA margin improvement of 100 basis points on average per year for the 2017-2020 period.”

The robust results and impressive revenue growth outlook is anticipated to keep the stock bullish in the short-term.

The historical price chart indicates that the stock is making new yearly highs. Furthermore, the MACD indicator is making new highs. As a result, we can expect the stock to move up in the short-term.

phg - techncial analysis - 24th July 2019

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Andrew Wright

Prior to founding in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.

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