Philips Launches EUR1.5 Billion Share Buyback; 2Q Profit Hit by Provision -- Update
July 26 2021 - 4:35AM
Dow Jones News
By Ian Walker
Koninklijke Philips NV on Monday launched a 1.5 billion euro
($1.77 billion) share buyback program as it reported a fall in
second-quarter net profit after booking a provision against a
faulty component used in some sleep and respiratory-care products,
as previously flagged.
The Dutch health-technology company made a net profit
attributable to shareholders of EUR150 million for the quarter
ended June 30, compared with EUR208 million for the same period
last year. It booked a provision of EUR250 million.
Philips said in June that it would book the provision in its
accounts and had started a recall notification for the U.S. in
relation to certain sleep and respiratory-care devices. It said at
the time that the company had identified potential health risks
related to a sound-abatement foam component in certain devices. The
majority of the affected devices are in the first-generation
DreamStation sleep and respiratory-care product family, the company
said.
The company said Monday that it was in talks with the relevant
regulatory authorities to get approval to start deploying the
repair kits and replacement devices that it is producing.
Quarterly sales rose to EUR4.23 billion from EUR3.97 billion,
missing analysts' expectations for EUR4.19 billion taken from the
company's website. On a comparable basis, sales grew 9%, beating a
company-provided consensus estimate of 7.3%.
Adjusted Ebita--a metric that strips out exceptional and other
one-off items--was EUR532 million, compared with EUR390 million a
year earlier and a company-compiled consensus of EUR519 million,
Philips said.
The company said comparable order intake fell 15% with strong
double-digit growth in the diagnosis & treatment businesses and
a fall in the connected care businesses which was mainly due to the
Covid-19 related growth in the second quarter of 2020.
Free cash flow in the quarter was EUR167 million compared with
EUR212 million for the same period last year.
Philips backed its full-year guidance, expecting to deliver
low-to-mid-single-digit comparable sales growth for 2021. The
company also said it expects to report adjusted earnings before
interest, taxes and amortization margin improvement of 60 basis
points.
Shares at 0804 GMT were down 87 European cents, or 2.1%, at
EUR39.92.
Write to Ian Walker at ian.walker@wsj.com
(END) Dow Jones Newswires
July 26, 2021 04:34 ET (08:34 GMT)
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