Koninklijke Phillips
Electronics N.V. (PHG) reported net income of €412 million
($560.8 million) in the fourth quarter of 2013, compared to a net
loss of €420 million in the prior-year quarter. The year-over-year
growth was primarily due to overall improvement in operating
results and lower restructuring and acquisition related charges. In
addition, project Accelerate has also been a driving factor for the
robust increase in
income.
Phillips reported third-quarter
earnings of €0.44 (60 cents) compared to loss of €0.46 on earnings
in the prior year quarter.
Quarterly
Details
Fourth-quarter sales on a
comparable basis grew 7% year over year to €6.8 billion ($9.3
billion). However, group nominal sales increased marginally by 1%
year over year due to 6% impact from unfavorable currency
translations.
Earnings before Interest, Tax and
Amortization (EBITA), excluding restructuring and
acquisition-related charges, pension settlement loss, and loss on
the sale of industrial assets at Lighting, were €884 million ($1.2
billion) or 13.0% of sales versus 11.3% in the prior-year quarter.
Increase in adjusted EBITA was also driven by lower acquisition and
restructuring-related charges.
Segment
Details
Healthcare sales
on comparable basisfor the quarter were up 4% year
over year driven by growth across all of its businesses. Customer
services grew in high-single digits, while Home Healthcare
solutions increased mid single-digit and Patient Care &
Clinical Informatics reported low-single digit growth. In addition,
Imaging systems also reported a low-single digit decline.
Comparable sales in growth
geographies increased in double digits year-on-year, with strong
growth in China and Latin America. This was partly offset by a
decline in Russia & Central Asia. In addition, Western Europe
recorded low single-digit growth; while other mature geographies
achieved mid single-digit growth but North America reported a 1%
decline.
Orders in the Healthcare equipment
on a comparable basis declined 1% year over year in the reported
quarter. However, excluding multi-year deals in the prior-year
quarter, equipment order intake increased by 1%. Orders in the
Patient Care & Clinical Informatics grew low single digits,
while Imaging Systems showed a low single digit decline as orders
grew in low single digits, fully offset by 7% decline in both
Patient care and Clinical Informatics orders.
The Consumer
Lifestyle segment posted strong revenue growth of 8% to
€1.4 billion ($1.9 billion) in the quarter on a comparable basis.
During the quarter, the segment reported double-digit growth in
Domestic Appliances while Health & Wellness reported high
single-digit growth. The Personal Care division also grew in mid
single-digits during the quarter.
On geographical basis, Consumer
Lifestyle reported a double-digit comparable sales increase in
growth geographies while reporting low single-digit growth in
mature geographies. Western Europe and North America also showed
low single-digit growth.
During the reported quarter, the
Lightning segment reported sales
increase of 8.0% year over year on comparable basis. Segment
revenues were driven by double-digit growth at Lumileds and
Automotive. In addition, Light sources, Electronics and
Professional Lightning Solutions achieved mid single-digit growth,
partially offset by Consumer Luminaires which reported low
single-digit decline. LED sales grew 48% year over year and now
represent 34% of the total lighting sales.
Revenues in the Innovation,
Group & Services segment surged 22.2% to €237 million
($322.6 million), primarily due to due to higher IP royalties
related to one-time patent settlements in our Blu-ray and TV
licensing programs.
Geographical
Growth
On a geographical basis, comparable
sales in the growth geographies increased 15% in the fourth
quarter. The increase was driven by strong growth in China, Latin
America, Africa, the Middle East and Turkey.
The company’s growth markets
exclude the U.S., Canada, Western Europe, Australia, New Zealand,
South Korea and Japan.
The above mentioned geographies are
classified as mature markets and revenues increased 2% year over
year. The marginal decline in the mature markets was primarily
attributable to strong performance of the healthcare and Consumer
Lifestyle sectors, offset by flat Lightning sales.
Project
Accelerate
Phillips introduced project
Accelerate to improve its overall performance and reduce costs for
the company. The project is expected to be operational till 2017
and has five streams to enhance customer relevance, change company
culture, reduce overhead costs, streamline the End2End customer
value chains, and reallocate resources to profitable growth
opportunities.
In addition, the company has also
introduced a €1.1 billion cost reduction program. In fiscal 2013,
the company has achieved €641 million ($851 million) in gross
savings and has been able to reduce about 74% of the targeted
employees in fiscal 2013. This program is expected to be complete
by 2014.
Cash, Balance Sheet and
Share Repurchase
Net cash flow from operating
activities declined to €905 million ($1.2 billion) compared with
€1.1 billion in the comparable prior-year quarter. The decrease was
attributable to debt redemption and expenses related to
discontinued operations.
Capital expenditures for the
quarter were €297 million ($404.3 million) versus €303 million in
the year-ago period, due to lower investments in the Lighting and
Consumer Lifestyle segments.
At the end of fourth-quarter 2013,
Philips had a net debt position of €1.4 billion ($1.9 billion),
compared to €0.7 billion at the end of the fourth quarter of 2012.
During the quarter, the net debt decreased by €596 million ($811.2
million), largely due to a free cash inflow of €608 million ($828
million).
Phillips currently holds a Zacks
Rank #5 (Strong Sell). Other stocks that are worth considering in
the electronics products and general industry sector are
Mistras group Inc. (MG) , GigOptix
Inc. (GIG) and Altra Industrial Motion
Corp. (AIMC). Mistras carries a Zacks Rank #1 (Strong Buy)
while GigOptix and Altra carry a Zacks Rank #2 (Buy).
ALTRA HOLDINGS (AIMC): Free Stock Analysis Report
GIGOPTIX INC (GIG): Free Stock Analysis Report
MISTRAS GROUP (MG): Free Stock Analysis Report
KONINKLIJKE PHL (PHG): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
GigPeak, Inc. (AMEX:GIG)
Historical Stock Chart
From Jun 2024 to Jul 2024
GigPeak, Inc. (AMEX:GIG)
Historical Stock Chart
From Jul 2023 to Jul 2024