Philips Reports 5% y-o-y Increase In 1Q19 Sales

Philips Reports 5% y-o-y Increase In 1Q19 Sales
May 1, 2019


Shares of Philips Electronics NV (NYSE: PHG) yesterday rallied 4.47% to close at $43 after the Dutch consumer electronics company posted a year-on-year increase in profit in the first quarter of fiscal 2019, with an increase in sales and order backlog.

The Amsterdam-based health technology company stated that sales for the quarter increased roughly 5% to €4.15 billion from €3.94 billion last year. The company recorded a comparable sales growth of 2%. For the first quarter of 2019, the company posted net income of €162 million, an increase from €124 million reported last year. On a per share basis, earnings increased to €0.18, from €0.13 euro in the corresponding period last year.

Income from continuing operations rose to €171 million in 1Q19, from €94 million in the year-ago period. Income from operations increased to €245 million euros in the March quarter, from €201 million in the similar period of 2018. Operating margin increased slightly to 5.9%, from 5.1% last year.

Adjusted EBITA margin represented 8.8% of sales in the quarter ended March 2019, compared to 8.7% of sales in the prior-year period. Adjusted EBITDA soared to €576 million, from €512 million in the earlier year. During the recent-quarter, adjusted EBITDA margin increased to 13.9%, from 13% in 1Q18.

Commenting on the results, Chief Executive Officer Frans van Houten said, “We had a reasonable start to the year, as we delivered 2% comparable sales and order intake growth, further building on strong growth in 2018. I am encouraged that the measures taken in the Personal Health businesses resulted in regained momentum and a step-up of sales growth, which was led by the high-teens comparable sales growth in the Oral Healthcare business. Moreover, I am pleased with the double-digit comparable sales and order intake growth for the Group in the growth geographies. We continue to expect our performance momentum to improve over the course of the year, based on the demand for our innovative products and solutions to improve people’s health and enhance care provider productivity, supported by our order book.”

Segment wise,

  • The Diagnosis & Treatment businesses posted 2% comparable sales growth, mainly due to double-digit growth in Image-Guided Therapy.
  • Connected Care businesses recorded a 1% decline in comparable sales, led by low-single-digit growth in Sleep & Respiratory Care and a mid-single-digit drop in Monitoring & Analytics.
  • The Personal Health businesses reported 5% growth in comparable sales, driven by high-single-digit growth in mature geographies and high-teens growth worldwide in Oral Healthcare.

On a comparable basis, sales in growth geographies increased by 10%, with double-digit growth in China and Central & Eastern Europe. In developed regions, sales declined 1% due to nearly flat sales in Western Europe and a low-single-digit drop in North America and other sophisticated regions. Going forward, Philips reiterated its comparable sales growth target of between 4% and 6% and an adjusted EBITA margin increase of 100 basis points on average per year for the 2017 to 2020 period.

Procurement savings during the first-quarter was €38 million. Savings from overhead and other productivity programs was €75 million. On January 29th, 2019, Philips disclosed its new share buyback program to the tune of €1.5 billion. The share repurchase program, executed mainly for capital reduction purposes, is anticipated to be completed in the second-quarter of 2019.

Notably, Philips announced last week that it is expanding its portfolio of radiology solutions with teleradiology facilities to resolve the growing shortage of radiologists and the urgent need to enhance access to appropriate treatments.

Earlier last month, Philips inked a deal to take over the healthcare Information systems division of Carestream Health Inc. Carestream offers medical imaging and healthcare IT solutions to clients in the US. Financial details of the transaction were not revealed. Philips anticipates finishing the takeover process in the second half of 2019, pending regulatory approvals.

The solid results and expansion plans are expected to keep the stock in an uptrend in the week ahead.

Technically, the stock has crossed above its 50-day moving average. Additionally, the MACD indicator’s reading has turned positive. As a result, we can expect the uptrend to continue in the short-term.

phi - technical analysis - 1st May 2019

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Ian Maguire

Ian Maguire

Ian is our resident contributor to the latest going ons in the cryptomarket, keeping up to date with the latest icos and coins

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