We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Koninklijke Philips' (PHG) Q1 Earnings Down on Coronavirus Impact
Read MoreHide Full Article
Koninklijke Philips N.V. (PHG - Free Report) reported first-quarter 2020 adjusted earnings of €0.18 per share, down 37.9% from the year-ago quarter. COVID-19 impacted sales as well as adjusted EBITDA by 5 percentage points and 3 percentage points, respectively.
Sales were flat on a year-over-year basis at €4.16 billion. Comparable sales (includes adjustments for consolidation charges & currency effects) dipped 2% year over year, primarily due to the negative impact of COVID-19.
Notably, high-single-digit comparable sales growth in the Connected Care businesses and low-single-digit growth in the Diagnosis & Treatment businesses were fully offset by a double-digit decline in the Personal Health businesses.
The company’s comparable order intake grew 23% with double-digit growth in the Connected Care businesses while the Diagnosis & Treatment businesses stayed flat year over year.
Growth in comparable order intake was driven by solid demand for diagnostic imaging, hospital ventilators and patient monitors. Philips is investing more than €100 million in wide expansion of its production volumes in close collaboration with suppliers and partners.
Koninklijke Philips N.V. Price, Consensus and EPS Surprise
Philips plans a further fourfold production ramp-up by the third quarter of 2020. This plan will enable the company to not only deliver 43,000 fully-featured, critical care ventilators to the US government in 2020 but simultaneously to the rest of the world.
Sales declined 12% on a comparable basis in growth geographies with double-digit decline in China due to the COVID-19 outbreak. Comparable order intake grew in double digits, driven by China and Latin America.
Sales in mature geographies inched up 2% year over year on a comparable basis with mid-single-digit growth in North America and low single-digit growth in Western Europe.
Comparable order intake in mature geographies grew in double digits, driven by Western Europe, other mature geographies and North America.
Segmental Update
Diagnosis & Treatment revenues increased 6% from the year-ago quarter to €1.83 billion. Comparable sales grew 2%, driven by mid-single-digit growth in Diagnostic Imaging.
On a geographic basis, China witnessed mid-single-digit growth. Comparable sales in growth geographies showed low-single-digit growth.
Mature geographies grew at a low-single-digit rate, reflecting mid-single-digit growth in North America and low-single-digit growth in Western Europe.
Connected Care business revenues improved 9% to €1.11 billion. Comparable sales increased 7%, primarily driven by COVID-19-generated demand with double-digit growth in Sleep & Respiratory Care and low-single-digit growth in Monitoring & Analytics.
Mature geographies grew in high-single digits, primarily on double-digit growth in Western Europe and a mid-single digit rise in North America and other mature geographies.
Growth geographies showed high-single-digit growth, driven by double-digit growth in China and Central & Eastern Europe.
The company introduced the Philips Respironics E30 ventilator for emergency use when a fully-featured critical care ventilator was not available. Philips is targeting a production rate of 15,000 units per week in April for this new ventilator, which is designed for large-scale production.
Personal Health sales declined 12% year over year to €1.14 billion. Comparable sales fell 13% due to the COVID-19 outbreak. While Oral Healthcare declined in high-single-digit, both Personal Care and Domestic Appliances witnessed a double-digit decline.
Growth geographies declined in double-digits primarily due to decline in China. Mature geographies posted a mid-single-digit fall due to mid-single-digit decline in Western Europe and a double-digit decrease in other mature geographies.
Other segment sales dropped 25.8% to €89 million, primarily due to lower royalty income.
Operating Details
Gross margin contracted 110 basis points (bps) on a year-over-year basis to 44.4% in the reported quarter.
Selling and general & administrative expenses contracted 140 bps and 20 bps, respectively. However, research & development expenses expanded 120 bps.
In the reported quarter, procurement cost savings totaled €36 million. Savings from overhead and other productivity programs were €59 million.
Philips’ adjusted earnings before interest, taxes and amortization (EBITA) — the company’s preferred measure of operational performance — were €244 million, down 33% from the year-ago quarter.
Adjusted EBITA margin shrank 290 bps on a year-over-year basis to 5.9%.
Diagnosis & Treatment and Connected Care adjusted EBITA margins expanded 10 bps and 150 bps, respectively. However, Personal Health adjusted EBITA margin contracted 760 bps on a year-over-year basis.
Balance Sheet & Other Details
As of Mar 31, 2019, Philips’ cash and cash equivalents were €2.14 billion and total debt was €6.87 billion. This compares with cash and cash equivalents of €1.43 billion and total debt of €5.45 billion as of Dec 31.
Meanwhile, net cash flow generated from operating activities came in at €143 million. Free cash outflow was €57 million.
As of the first-quarter 2020 end, Philips completed 50.3% of its share buyback program announced on Jan 29.
Guidance
Philips anticipates performance of all its geographies to be affected by the COVID-19 pandemic, resulting in steep revenue decline in Personal Health businesses and a high-single-digit weakness in Diagnosis & Treatment businesses in the second quarter of 2020. However, Connected Care business is expected to get a significant boost.
The company aims to revive its growth momentum and improve profitability for the overall business in the second half of this year assuming a gradual improvement in consumer demand, normalization of elective procedures and conversion of existing order book for the Diagnosis & Treatment and Connected Care businesses as planned.
For 2020, Philips aims to achieve modest comparable sales growth and adjusted EBITA margin improvement.
Zacks Rank and Other Stocks to Consider
Phillips currently sports a Zacks Rank #1 (Strong Buy). CyberOptics , Pixelworks (PXLW - Free Report) and Avid Technology are some other stocks worth considering from the broader computer and technology sector, flaunting the same Zacks Rank as Philips. You can see the complete list of today’s Zacks #1 Rank stocks here.
CyberOptics, Pixelworks and Avid are set to report quarterly results on Apr 23, Apr 30 and May 7, respectively.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
Image: Bigstock
Koninklijke Philips' (PHG) Q1 Earnings Down on Coronavirus Impact
Koninklijke Philips N.V. (PHG - Free Report) reported first-quarter 2020 adjusted earnings of €0.18 per share, down 37.9% from the year-ago quarter. COVID-19 impacted sales as well as adjusted EBITDA by 5 percentage points and 3 percentage points, respectively.
Sales were flat on a year-over-year basis at €4.16 billion. Comparable sales (includes adjustments for consolidation charges & currency effects) dipped 2% year over year, primarily due to the negative impact of COVID-19.
Notably, high-single-digit comparable sales growth in the Connected Care businesses and low-single-digit growth in the Diagnosis & Treatment businesses were fully offset by a double-digit decline in the Personal Health businesses.
The company’s comparable order intake grew 23% with double-digit growth in the Connected Care businesses while the Diagnosis & Treatment businesses stayed flat year over year.
Growth in comparable order intake was driven by solid demand for diagnostic imaging, hospital ventilators and patient monitors. Philips is investing more than €100 million in wide expansion of its production volumes in close collaboration with suppliers and partners.
Koninklijke Philips N.V. Price, Consensus and EPS Surprise
Koninklijke Philips N.V. price-consensus-eps-surprise-chart | Koninklijke Philips N.V. Quote
Philips plans a further fourfold production ramp-up by the third quarter of 2020. This plan will enable the company to not only deliver 43,000 fully-featured, critical care ventilators to the US government in 2020 but simultaneously to the rest of the world.
Sales declined 12% on a comparable basis in growth geographies with double-digit decline in China due to the COVID-19 outbreak. Comparable order intake grew in double digits, driven by China and Latin America.
Sales in mature geographies inched up 2% year over year on a comparable basis with mid-single-digit growth in North America and low single-digit growth in Western Europe.
Comparable order intake in mature geographies grew in double digits, driven by Western Europe, other mature geographies and North America.
Segmental Update
Diagnosis & Treatment revenues increased 6% from the year-ago quarter to €1.83 billion. Comparable sales grew 2%, driven by mid-single-digit growth in Diagnostic Imaging.
On a geographic basis, China witnessed mid-single-digit growth. Comparable sales in growth geographies showed low-single-digit growth.
Mature geographies grew at a low-single-digit rate, reflecting mid-single-digit growth in North America and low-single-digit growth in Western Europe.
Connected Care business revenues improved 9% to €1.11 billion. Comparable sales increased 7%, primarily driven by COVID-19-generated demand with double-digit growth in Sleep & Respiratory Care and low-single-digit growth in Monitoring & Analytics.
Mature geographies grew in high-single digits, primarily on double-digit growth in Western Europe and a mid-single digit rise in North America and other mature geographies.
Growth geographies showed high-single-digit growth, driven by double-digit growth in China and Central & Eastern Europe.
The company introduced the Philips Respironics E30 ventilator for emergency use when a fully-featured critical care ventilator was not available. Philips is targeting a production rate of 15,000 units per week in April for this new ventilator, which is designed for large-scale production.
Personal Health sales declined 12% year over year to €1.14 billion. Comparable sales fell 13% due to the COVID-19 outbreak. While Oral Healthcare declined in high-single-digit, both Personal Care and Domestic Appliances witnessed a double-digit decline.
Growth geographies declined in double-digits primarily due to decline in China. Mature geographies posted a mid-single-digit fall due to mid-single-digit decline in Western Europe and a double-digit decrease in other mature geographies.
Other segment sales dropped 25.8% to €89 million, primarily due to lower royalty income.
Operating Details
Gross margin contracted 110 basis points (bps) on a year-over-year basis to 44.4% in the reported quarter.
Selling and general & administrative expenses contracted 140 bps and 20 bps, respectively. However, research & development expenses expanded 120 bps.
In the reported quarter, procurement cost savings totaled €36 million. Savings from overhead and other productivity programs were €59 million.
Philips’ adjusted earnings before interest, taxes and amortization (EBITA) — the company’s preferred measure of operational performance — were €244 million, down 33% from the year-ago quarter.
Adjusted EBITA margin shrank 290 bps on a year-over-year basis to 5.9%.
Diagnosis & Treatment and Connected Care adjusted EBITA margins expanded 10 bps and 150 bps, respectively. However, Personal Health adjusted EBITA margin contracted 760 bps on a year-over-year basis.
Balance Sheet & Other Details
As of Mar 31, 2019, Philips’ cash and cash equivalents were €2.14 billion and total debt was €6.87 billion. This compares with cash and cash equivalents of €1.43 billion and total debt of €5.45 billion as of Dec 31.
Meanwhile, net cash flow generated from operating activities came in at €143 million. Free cash outflow was €57 million.
As of the first-quarter 2020 end, Philips completed 50.3% of its share buyback program announced on Jan 29.
Guidance
Philips anticipates performance of all its geographies to be affected by the COVID-19 pandemic, resulting in steep revenue decline in Personal Health businesses and a high-single-digit weakness in Diagnosis & Treatment businesses in the second quarter of 2020. However, Connected Care business is expected to get a significant boost.
The company aims to revive its growth momentum and improve profitability for the overall business in the second half of this year assuming a gradual improvement in consumer demand, normalization of elective procedures and conversion of existing order book for the Diagnosis & Treatment and Connected Care businesses as planned.
For 2020, Philips aims to achieve modest comparable sales growth and adjusted EBITA margin improvement.
Zacks Rank and Other Stocks to Consider
Phillips currently sports a Zacks Rank #1 (Strong Buy). CyberOptics , Pixelworks (PXLW - Free Report) and Avid Technology are some other stocks worth considering from the broader computer and technology sector, flaunting the same Zacks Rank as Philips. You can see the complete list of today’s Zacks #1 Rank stocks here.
CyberOptics, Pixelworks and Avid are set to report quarterly results on Apr 23, Apr 30 and May 7, respectively.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>