Philips Q1 Orders Up, Sees Growth In FY20 Comparable Sales, Margin; Stock Up
Shares of Philips Electronics NV (PHGFF.PK,PHG) were gaining around 7 percent in Dutch trading after the consumer electronics giant reported strong growth in orders in the first quarter and said it sees modest comparable sales growth in fiscal 2020, despite the significant impact from the coronavirus or COVID-19 pandemic. First-quarter net profit, meanwhile, plunged from last year hurt by COVID-19 impact.
Further, Philips maintained its proposed dividend of 0.85 euro per share against the net income of 2019, which will be distributed in shares only.
The company said it is investing more than 100 million euros to steeply ramp up production volumes, as order intake for diagnostic imaging, hospital ventilators, and patient monitors have increased significantly.
Frans van Houten, CEO, said, “The impact of COVID-19 gradually increased in the course of the first quarter, initially affecting our businesses in China and Asia Pacific starting late January, and subsequently affecting our businesses in the rest of the world from March onwards. On that basis, we expect that all our geographies will be impacted throughout the second quarter.”
For the full year 2020, the company now expects to achieve a modest comparable sales growth and adjusted EBITA margin improvement. Given the current uncertainty and volatility, the company will not provide more specific guidance for 2020 at this time.
Philips projects a significant increase in revenue of Connected Care businesses, partially offset by steep revenue decline for Personal Health businesses and a sizable high-single-digit decline for Diagnosis & Treatment businesses.
The company now expects to return to growth and improved profitability in the second half of the year, assuming that it can convert existing order book for the Diagnosis & Treatment and Connected Care businesses as planned, elective procedures normalize, and consumer demand gradually improves.
Earlier, while announcing the fourth-quarter results, the company expected 4 to 6 percent comparable sales growth and adjusted EBITA margin improvement of around 100 basis points for fiscal 2020.
For the first quarter, net income plunged to 39 million euros from last year’s 162 million euros. Earnings per share fell to 0.04 euro from 0.18 euro a year ago.
Adjusted earnings per share amounted to 0.18 euro, compared to 0.29 euro last year.
Income from continuing operations was 42 million euros, compared to 171 million euros last year. Adjusted EBITA margin was 5.9 percent of sales, compared to 8.8 percent of sales in the prior year.
Philips delivered sales of 4.159 billion euros, nearly flat with last year’s 4.151 billion euros. On a comparable basis, sales dropped 2 percent.
However, comparable order intake increased 23 percent, compared to 3 percent growth last year, with double-digit growth in the Connected Care businesses, while the Diagnosis & Treatment businesses were in line.
In Amsterdam, Philips shares were trading at 39.20 euros, up 4.66 percent.
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