Philips Q1 Loss Widens, Adj. EBITA Rise; Says Confident Of FY23; Stock Climbs

Shares of Philips Electronics NV were gaining around 12 percent in the morning trading in Amsterdam after the Dutch consumer electronics giant reported Monday higher adjusted EBITA and sales in its first quarter, and said it is confident for fiscal 2023. Net loss, meanwhile, was wider than last year as it set aside a significant litigation provision related to the anticipated resolution of the Respironics recall in the U.S.

Roy Jakobs, CEO of Royal Philips, said, “Looking ahead, based on our solid performance in the quarter, our order book, and the ongoing actions to further improve execution, we are confident in our plan for the year 2023, acknowledging that uncertainties remain.”

The company further said its simplification of operating model and restructuring plans remain on track.

Regarding Philips Respironics field action for specific sleep therapy and ventilator devices, the company noted that more than 95 percent of the new replacement devices and repair kits required for the remediation of the registered devices have been produced, and majority of them have been sent to patients and home care providers. The remaining 5 percent of the registered devices are primarily ventilators, for which Philips Respironics is working towards a solution.

For the first quarter, net loss was 665 million euros, wider than last year’s loss of 151 million euros. Loss per share was 0.75 euro, compared to loss of 0.17 euro a year ago.

Income from operations amounted to a loss of 583 million euros, compared to loss of 181 million euros.

The latest results included 575 million euros litigation provision related to the anticipated resolution of the Respironics recall-related economic loss class action in the US.

Adjusted income from continuing operations attributable to shareholders was 192 million euros, compared to 135 million euros a year ago. Adjusted income from continuing operations was 0.22 euro, compared to 0.15 euro last year.

Adjusted EBITA increased to 359 million euros or 8.6 percent of sales from last year’s 243 million euros or 6.2 percent of sales. The adjusted earnings growth was mainly due to increased sales and productivity measures, partly offset by cost inflation.

Group sales increased 2 percent to 4.17 billion euros from last year’s 3.92 billion euros.

Comparable sales increased by 6 percent, driven by continued supply chain improvements. In the quarter, the Diagnosis & Treatment businesses recorded double-digit growth, and the growth was low-single-digit in Connected Care businesses. Meanwhile, the Personal Health businesses posted a mid-single-digit decline.

Sales were also supported by the good momentum for the Diagnosis & Treatment and Connected Care businesses in China.

Comparable order intake growth was flat, with double-digit growth in the Diagnosis & Treatment businesses, offset by a decline in the Connected Care businesses.

Philips’ order book remains strong, with 10 percent growth from the prior year.

In the quarter, the Diagnosis & Treatment businesses’ comparable sales increased 15 percent. Comparable order intake grew double-digit.

The Connected Care businesses’ comparable sales increased 3 percent, while comparable order intake declined double- digit after strong growth in the period between 2020 and 2022.

The Personal Health businesses’ comparable sales decreased 6 percent due to the anticipated lower consumer demand.

Comparable sales in mature geographies increased 4 percent, with low-single-digit growth in North America and mid-single-digit growth in Western Europe. In growth geographies, sales increased 10 percent on a comparable basis, with strong contributions from China, Middle East & Turkey, Latin America and Central & Eastern Europe.

In Amsterdam, Philips shares were trading at 19.38 euros, up 11.78 percent.

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