Philips delivers Q1 sales of EUR 4.2 billion, with 2% comparable
sales growth; income from continuing operations increased to EUR
171 million and Adjusted EBITA margin improved to 8.8%
April 29, 2019 First-quarter
highlights•
Sales in the quarter amounted to EUR 4.2 billion, with 2%
comparable sales growth•
Comparable order intake increased
2%• Income from
continuing operations increased to EUR 171 million, compared to EUR
94 million in Q1 2018•
Adjusted EBITA margin was 8.8% of sales, compared to 8.7% of sales
in Q1 2018• Income from
operations increased to EUR 245 million, compared to EUR 201
million in Q1 2018•
Operating cash flow amounted to EUR 14 million, compared to EUR 92
million in Q1 2018; free cash outflow was EUR 206 million, compared
to EUR 47 million in Q1 2018
Frans van Houten, CEO
“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. We reaffirm our
overall targets of 4-6% comparable sales growth and an Adjusted
EBITA margin improvement of 100 basis points on average per year
for the 2017–2020 period.”
Reporting segment performance
The Diagnosis & Treatment businesses recorded 2% comparable
sales growth, led by double-digit growth in Image-Guided Therapy.
Comparable order intake showed a mid-single-digit increase, further
building on the double-digit growth in Q1 2018. The Adjusted EBITA
margin increased to 6.2%.
Comparable sales in the Connected Care businesses decreased 1%,
with low-single-digit growth in Sleep & Respiratory Care and a
mid-single-digit decline in Monitoring & Analytics. Comparable
order intake showed a mid-single-digit decline. The Adjusted EBITA
margin decreased to 8.3%.
The Personal Health businesses delivered comparable sales growth
of 5%, driven by high-single-digit growth in mature geographies and
high-teens growth globally in Oral Healthcare. The Adjusted EBITA
margin increased to 14.7%.
Philips’ ongoing focus on innovation and strategic partnerships
resulted in the following highlights in the quarter:
• Philips’
Image-Guided Therapy Devices delivered double-digit growth, driven
by all major diagnostic and therapeutic catheter product families.
The continued strong performance is supported by the tight
integration with Philips’ highly successful Azurion platform and by
a growing body of clinical evidence, such as the recent positive
results of the DEFINE PCI study to assess the value of iFR, which
is Philips’ new physiologic guidance
technology.• Further
expanding its offering in mobile image-guided therapy systems for
conventional operating rooms (ORs), the company launched Philips
Zenition, its new mobile C-arm imaging platform. Zenition is easy
to move between ORs and allows hospitals to maximize OR
performance, enhance clinical capabilities, and improve staff
experience.• Reinforcing
its commitment to deliver industry-leading medical imaging and
healthcare IT solutions to improve patient care and enhance care
provider productivity, Philips signed an agreement to acquire
Carestream Health’s Healthcare Information Systems business, adding
a cloud-based enterprise imaging informatics platform and
complementary geographic footprint to its portfolio. In addition,
Philips expanded its radiology solutions portfolio with new
teleradiology services, building on the acquisition of Direct
Radiology’s teleradiology
platform.• To support the
expansion of the Ultrasound business into attractive adjacencies
such as General Imaging and Obstetrics & Gynecology, Philips
launched its new premium ultrasound system EPIQ Elite, which
combines the latest advances in transducer innovation and enhanced
performance to improve clinical confidence and the patient
experience.• Building on
its success in forging long-term strategic partnerships, Philips
signed multiple new agreements in the US, Europe and Asia. The
company recently signed its first long-term strategic partnership
agreement in Vietnam, to provide a turnkey hospital solution to the
newly-built Hong Duc General Hospital II, comprising the latest
medical imaging and healthcare IT solutions as well as design,
consulting and financing
services.• Expanding its
range of successful patient-centric CPAP mask designs, Philips
launched DreamWisp, the first-of-its-kind over-the-nose nasal mask
that allows patients with sleep apnea to sleep in any position they
want. With its robust nasal cushion and top-of-the-head tube
design, DreamWisp delivers a new level of comfort and freedom of
movement, providing patients with the therapy option that best
suits their needs.• To
advance patient care in the hospital, Philips launched IntelliSpace
Epidemiology Solution, which combines clinical informatics and
genomic sequencing information from pathogenic bacteria to optimize
the detection of healthcare-associated infections in the hospital.
A recent study shows an 87% reduction in time when identifying
infection transmissions using Philips IntelliSpace Epidemiology
Solution.• Philips
launched its new smart S7000 Shaver series globally. Designed to
address skin irritation and discomfort from shaving, the company’s
first connected shaver comes with a personalized solution for
sensitive skin and has received highly positive user
reviews.• The strong
performance of the Oral Healthcare business was driven by its
innovative portfolio, including the mid-range Philips Sonicare
ProtectiveClean toothbrush, which features pressure sensor
technology that alerts users when they are applying too much
pressure and automatically reduces brushing intensity, for a
brushing experience that delivers healthier gums and cleaner
teeth.
Cost savings
In the first quarter, procurement savings amounted to EUR 38
million. Overhead and other productivity programs delivered savings
of EUR 75 million.
Capital allocation
On January 29, 2019, Philips announced its new share buyback
program for an amount of up to EUR 1.5 billion. As of the end of
the first quarter of 2019, Philips had completed 8.3% of this share
buyback program. In the second quarter of 2019, Philips expects to
complete its EUR 1.5 billion share buyback program for capital
reduction purposes that was announced on June 28, 2017. Further
details can be found here.
Regulatory update
Philips has continued to make progress towards fulfilling its
obligations under the Consent Decree [1]. The US Food and Drug
Administration (FDA) recently reverted to Philips with follow-up
requests, which the company is currently acting on.
[1] Under the Consent Decree, Philips continues to export its
complete range of AED devices and manufacture and distribute its
H1/OnSite/Home automated external defibrillator (AED) model in the
US. The company also continues to service the AEDs and provide
consumables and the relevant accessories.
Click here to view the release online For further
information, please contact: Ben Zwirs
Philips Group Press Office Tel: +31 6 1521 3446 Email:
ben.zwirs@philips.com Martijn van der Starre
Philips Group Press Office Tel.: +31 6 2847 4617 E-mail:
martijn.van.der.starre@philips.com About Royal
Philips
Royal Philips (NYSE: PHG, AEX: PHIA) is a leading health
technology company focused on improving people's health and
enabling better outcomes across the health continuum from healthy
living and prevention, to diagnosis, treatment and home care.
Philips leverages advanced technology and deep clinical and
consumer insights to deliver integrated solutions. Headquartered in
the Netherlands, the company is a leader in diagnostic imaging,
image-guided therapy, patient monitoring and health informatics, as
well as in consumer health and home care. Philips generated 2018
sales of EUR 18.1 billion and employs approximately 77,000
employees with sales and services in more than 100 countries. News
about Philips can be found at www.philips.com/newscenter.
Forward-looking statements and other important
information Forward-looking statements This document and
the related oral presentation, including responses to questions
following the presentation, contain certain forward-looking
statements with respect to the financial condition, results of
operations and business of Philips and certain of the plans and
objectives of Philips with respect to these items. Examples of
forward-looking statements include statements made about the
strategy, estimates of sales growth, future Adjusted EBITA, future
developments in Philips’ organic business and the completion of
acquisitions and divestments. By their nature, these statements
involve risk and uncertainty because they relate to future events
and circumstances and there are many factors that could cause
actual results and developments to differ materially from those
expressed or implied by these statements. These factors include but
are not limited to: global economic and business conditions;
political instability, including developments within the European
Union such as Brexit, with adverse impact on financial markets; the
successful implementation of Philips’ strategy and the ability to
realize the benefits of this strategy; the ability to develop and
market new products; changes in legislation; legal claims;
increased healthcare regulation; changes in currency exchange rates
and interest rates; changes in foreign currency import or export
controls; future changes in tax rates and regulations, including
trade tariffs; pension costs and actuarial assumptions; changes in
raw materials prices; changes in employee costs; the ability to
identify and complete successful acquisitions, and to integrate
those acquisitions into the business, the ability to successfully
exit certain businesses or restructure the operations; the rate of
technological changes; cyber-attacks, breaches of cybersecurity;
political, economic and other developments in countries where
Philips operates; industry consolidation and competition; and the
state of international capital markets as they may affect the
timing and nature of the disposal by Philips of its remaining
interests in Signify. As a result, Philips’ actual future results
may differ materially from the plans, goals and expectations set
forth in such forward-looking statements. For a discussion of
factors that could cause future results to differ from such
forward-looking statements, see the Risk management chapter
included in the Annual Report 2018. Third-party market
share data Statements regarding market share, including
those regarding Philips’ competitive position, contained in this
document are based on outside sources such as research institutes,
industry and dealer panels in combination with management
estimates. Where information is not yet available to Philips, those
statements may also be based on estimates and projections prepared
by outside sources or management. Rankings are based on sales
unless otherwise stated. Use of non-IFRS
information In presenting and discussing the Philips
Group’s financial position, operating results and cash flows,
management uses certain non-IFRS financial measures. These non-IFRS
financial measures should not be viewed in isolation as
alternatives to the equivalent IFRS measure and should be used in
conjunction with the most directly comparable IFRS measures.
Non-IFRS financial measures do not have standardized meaning under
IFRS and therefore may not be comparable to similar measures
presented by other issuers. A reconciliation of these non-IFRS
measures to the most directly comparable IFRS measures is contained
in this document. Further information on non-IFRS measures can be
found in the Annual Report 2018. Use of fair value
information In presenting the Philips Group’s financial
position, fair values are used for the measurement of various items
in accordance with the applicable accounting standards. These fair
values are based on market prices, where available, and are
obtained from sources that are deemed to be reliable. Readers are
cautioned that these values are subject to changes over time and
are only valid at the balance sheet date. When quoted prices or
observable market data are not readily available, fair values are
estimated using appropriate valuation models and unobservable
inputs. Such fair value estimates require management to make
significant assumptions with respect to future developments, which
are inherently uncertain and may therefore deviate from actual
developments. Critical assumptions used are disclosed in the Annual
Report 2018. In certain cases independent valuations are obtained
to support management’s determination of fair values.
Presentation All amounts are in millions of euros
unless otherwise stated. Due to rounding, amounts may not add up
precisely to totals provided. All reported data is unaudited.
Financial reporting is in accordance with the accounting policies
as stated in the Annual Report 2018. As disclosed, per January 1,
2019 IFRS 16 lease accounting has been implemented. As announced on
January 10, 2019, Philips has realigned the composition of its
reporting segments effective as of January 1, 2019. The most
notable changes are the shifts of the Sleep & Respiratory Care
business from the Personal Health segment to the renamed Connected
Care segment and most of the Healthcare Informatics business from
the renamed Connected Care segment to the Diagnosis & Treatment
segment. Accordingly, the comparative figures of 2017 and 2018 have
been restated. The restatement has been published on the Philips
Investor Relations website and can be accessed here. Market
Abuse Regulation This press release contains inside
information within the meaning of Article 7(1) of the EU Market
Abuse Regulation.
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