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Philips (PHG) Expands Personal Health Portfolio at CES 2019

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Philips (PHG - Free Report) is gradually evolving as a healthcare company by augmenting its presence in the domain with an expanding portfolio.

To further bolster its presence in consumer health, the company recently introduced a range of intelligent, adaptive and personalized consumer health solutions at Consumer Electronics Show (CES) 2019.

The new offerings include sleep, oral and personal care solutions. The company also launched Philips Cares Aging & Caregiving service in the United States.

Brief Overview of the New Solutions

Philips’ expanded SmartSleep solution suite now includes the digital sleep analysis tool SmartSleep Analyzer, SmartSleep Snoring Relief Band, the SmartSleep Better Sleep Program, and sleep & wake-up lights.

Moreover, Philips launched its remote dental consultation service — Sonicare teledentistry — in North America. Through the Philips Sonicare app, consumers can address their oral healthcare needs on a daily basis.

Additionally, Philips introduced Smart Shaver series 7000, the world's first connected and artificial intelligence (AI) backed shaving solution at CES.

Portfolio Strength to Aid Personal Health Growth

Personal Health accounts for almost 40% of Philips’ revenues. In the last reported quarter, comparable sales rose 4%, driven by mid-single-digit growth in Sleep & Respiratory Care, Personal Care and Domestic Appliances. Health & Wellness sales remain unchanged on a year-over-year basis.

Philips benefited from strong demand for DreamWear Full Face mask. Following the release of the solution, the company recorded double-digit growth in the mask segment. The company also launched Series 9000 Prestige shaver in the high-end male grooming portfolio.

Moreover, successful rollout of the Philips OneBlade Face+ Body to additional markets within the Americas, Asia-Pacific and Eastern Europe drove growth in personal care.

Philips’ focus on continuing innovation is strengthening Personal Health portfolio that provides competitive advantage. Management expects strong growth potential in all the three high-margin businesses — sleep & respiratory care, health & wellness and personal care.

Notably, Philips’ sleep & respiratory care continues to grow double digit in international markets. Despite sluggish growth in the near term, the company believes that the segment has solid U.S. growth prospects for 2019.

Moreover, the company is reluctant to join price war by offering deep discounts, which will benefit Personal Health segment’s profitability.   

Philips expects Personal Health to grow between 4% and 6% for 2018. However, the first half of 2019 is expected to be negatively impacted by unfavorable currency headwinds and tariffs related to the U.S.-China trade war.

Notably, Philips expects trade tariffs as the trade war will have a negative net impact of €60 million on EBITA in 2019. This Zacks Rank #3 (Hold) stock is set to report fourth-quarter 2018 results on Jan 29, 2019.

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