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Philips (PHG) Q1 Earnings Beat Estimates, Revenues Fall Y/Y
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Koninklijke Philips N.V. (PHG - Free Report) reported first-quarter 2024 adjusted earnings of 28 cents per share, outpacing the Zacks Consensus Estimate by 55.6%.
Revenues of $4.49 billion missed the consensus mark by 3.4%.
In domestic currency, sales decreased 1% on a year-over-year basis to €4.14 billion.
Comparable sales (including adjustments for consolidation charges & currency effects) grew 2% year over year. The growth was attributed to strength in the Diagnosis & Treatment and Personal Health segments, partly offset by a decline in Connected Care.
Comparable sales in the Diagnosis & Treatment and Personal Health businesses recorded low-single-digit growth year over year.
However, comparable sales in the Connected Care business witnessed a low single-digit decline on a year-over-year basis.
Further, Philips’ comparable order intake declined 3.8% year over year in the reported quarter, primarily due to weakening demand in China.
Sales improved 3% on a comparable basis in growth geographies. Sales in mature geographies were up 2% year over year on a comparable basis.
Koninklijke Philips N.V. Price, Consensus and EPS Surprise
Diagnosis & Treatment revenues rose 1% from the year-ago quarter to €2.03 billion. Comparable sales jumped 3% year over year, driven by double-digit growth in Precision Diagnosis and Image-Guided Therapy.
Connected Care revenues decreased 5% year over year to €1.16 billion. Comparable sales fell 1%, due to a decline in Monitoring.
Personal Health revenues declined 1% year over year to €790 million. Comparable sales rose 3% year over year, owing to strength in Personal Care and Mother & Child Care.
Other segment sales amounted to €157 million, up 18.5% on a year-over-year basis.
Operating Details
Gross margin expanded 180 basis points (bps) on a year-over-year basis to 43.9% in the reported quarter.
General & administrative expenses, as a percentage of sales, were 3.3%, which contracted 50 bps on a year-over-year basis. Moreover, selling expenses expanded 60 bps to 26.5%. Research & development expenses dipped 260 bps to 10.1%.
Restructuring, acquisition-related and other charges came in at €1.14 billion compared with €868 million a year ago.
Operating model productivity, procurement and other productivity programs delivered savings of €55 million, €40 million and €56 million, respectively. This resulted in total savings of €151 million.
Phillips’ adjusted earnings before interest, taxes and amortization (EBITA) — the company’s preferred measure of operational performance — rose 8.1% year over year to €388 million. EBITA margin expanded 80 bps on a year-over-year basis to 9.4% in the reported quarter.
Diagnosis & Treatment’s adjusted EBITA margin contracted 380 bps on a year-over-year basis to 9.2%, primarily due to normalization of the product mix.
Connected Care’s adjusted EBITA margin was 6.4% in the reported quarter, which expanded 470 bps on a year-over-year basis.
Personal Health’s adjusted EBITA margin expanded 200 bps on a year-over-year basis to 15.2%.
Balance Sheet
As of Mar 31, 2024, Philips’ cash and cash equivalents were €1.4 billion compared with €1.87 billion as of Dec 31, 2023. Total debt was €7.737 billion compared with €7.689 billion as of Dec 31, 2023.
Operating cash outflow was €171 million against the year-ago quarter’s operating cash flow of €202 million.
Free cash outflow was €336 million against the year-ago quarter’s free cash flow of €117 million.
2024 Guidance
Philips expects to deliver 3-5% of comparable sales growth.
Further, adjusted EBITA margin is expected in the band of 11-11.5%.
Philips expects free cash flow to be between €900 million and €1.1 billion.
Zacks Rank & Stocks to Consider
Currently, Philips carries a Zacks Rank #4 (Sell).
Image: Bigstock
Philips (PHG) Q1 Earnings Beat Estimates, Revenues Fall Y/Y
Koninklijke Philips N.V. (PHG - Free Report) reported first-quarter 2024 adjusted earnings of 28 cents per share, outpacing the Zacks Consensus Estimate by 55.6%.
Revenues of $4.49 billion missed the consensus mark by 3.4%.
In domestic currency, sales decreased 1% on a year-over-year basis to €4.14 billion.
Comparable sales (including adjustments for consolidation charges & currency effects) grew 2% year over year. The growth was attributed to strength in the Diagnosis & Treatment and Personal Health segments, partly offset by a decline in Connected Care.
Comparable sales in the Diagnosis & Treatment and Personal Health businesses recorded low-single-digit growth year over year.
However, comparable sales in the Connected Care business witnessed a low single-digit decline on a year-over-year basis.
Further, Philips’ comparable order intake declined 3.8% year over year in the reported quarter, primarily due to weakening demand in China.
Sales improved 3% on a comparable basis in growth geographies. Sales in mature geographies were up 2% year over year on a comparable basis.
Koninklijke Philips N.V. Price, Consensus and EPS Surprise
Koninklijke Philips N.V. price-consensus-eps-surprise-chart | Koninklijke Philips N.V. Quote
Segmental Update
Diagnosis & Treatment revenues rose 1% from the year-ago quarter to €2.03 billion. Comparable sales jumped 3% year over year, driven by double-digit growth in Precision Diagnosis and Image-Guided Therapy.
Connected Care revenues decreased 5% year over year to €1.16 billion. Comparable sales fell 1%, due to a decline in Monitoring.
Personal Health revenues declined 1% year over year to €790 million. Comparable sales rose 3% year over year, owing to strength in Personal Care and Mother & Child Care.
Other segment sales amounted to €157 million, up 18.5% on a year-over-year basis.
Operating Details
Gross margin expanded 180 basis points (bps) on a year-over-year basis to 43.9% in the reported quarter.
General & administrative expenses, as a percentage of sales, were 3.3%, which contracted 50 bps on a year-over-year basis. Moreover, selling expenses expanded 60 bps to 26.5%. Research & development expenses dipped 260 bps to 10.1%.
Restructuring, acquisition-related and other charges came in at €1.14 billion compared with €868 million a year ago.
Operating model productivity, procurement and other productivity programs delivered savings of €55 million, €40 million and €56 million, respectively. This resulted in total savings of €151 million.
Phillips’ adjusted earnings before interest, taxes and amortization (EBITA) — the company’s preferred measure of operational performance — rose 8.1% year over year to €388 million. EBITA margin expanded 80 bps on a year-over-year basis to 9.4% in the reported quarter.
Diagnosis & Treatment’s adjusted EBITA margin contracted 380 bps on a year-over-year basis to 9.2%, primarily due to normalization of the product mix.
Connected Care’s adjusted EBITA margin was 6.4% in the reported quarter, which expanded 470 bps on a year-over-year basis.
Personal Health’s adjusted EBITA margin expanded 200 bps on a year-over-year basis to 15.2%.
Balance Sheet
As of Mar 31, 2024, Philips’ cash and cash equivalents were €1.4 billion compared with €1.87 billion as of Dec 31, 2023. Total debt was €7.737 billion compared with €7.689 billion as of Dec 31, 2023.
Operating cash outflow was €171 million against the year-ago quarter’s operating cash flow of €202 million.
Free cash outflow was €336 million against the year-ago quarter’s free cash flow of €117 million.
2024 Guidance
Philips expects to deliver 3-5% of comparable sales growth.
Further, adjusted EBITA margin is expected in the band of 11-11.5%.
Philips expects free cash flow to be between €900 million and €1.1 billion.
Zacks Rank & Stocks to Consider
Currently, Philips carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical market sector are Align Technology (ALGN - Free Report) , Anika Therapeutics (ANIK - Free Report) , and AdaptHealth (AHCO - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Align Technology have surged 11.2% in the year-to-date period. ALGN’s long-term earnings growth rate is currently projected at 6.87%.
Anika Therapeutics shares have gained 14.6% in the year-to-date period. ANIK’s long-term earnings growth rate is currently projected at 10.00%.
AdaptHealth shares have gained 39% in the year-to-date period. The long-term earnings growth rate for AHCO is currently projected at 17.33%.