Sales, earnings rise in Q2 for Philips Healthcare

Royal Philips (NYSE:PHG) said today that sales and earnings for Philips Healthcare, its largest division, rose at a double-digit clip during the 2nd quarter.

The Dutch conglomerate said earnings before interest and taxes rose 17.7% to $243.0 million (€219 million), as sales grew 28.9% to $3.06 billion (€2.75 billion) for the healthcare business, compared with Q2 2014. But margin improvements were mostly gobbled up by the effects of a strong dollar, Philips said.

Overall profits for Philips grew 12.8% to $304.1 million (€274 million), or 33¢ (€0.30) per share, on sales of $6.63 billion (€5.97 billion).

“We are encouraged by the continuing improvement in our operational results in the 2nd quarter of 2015, driven by strong comparable sales growth in healthcare and strong margin improvements in consumer lifestyle and lighting. While we are pleased with our progress overall and our healthcare performance in the U.S. in particular, we are increasingly concerned about the global macro-economic environment, particularly in China, Russia and Latin America,” CEO Frans van Houten said in prepared remarks.

“We are pleased that healthcare continues to improve its sales growth and profitability, with North America making a significant and positive contribution as we increase order fulfillment out of our Cleveland facility. We again secured strategically important multi-year contracts, including a $500 million partnership with Westchester Medical Center Health Network. Highlighting our leadership in ultrasound imaging and advanced informatics, we introduced the Philips Lumify app-based ultrasound solution in the U.S. The solution combines a dedicated Philips ultrasound transducer, a compatible smart device and application, and secure cloud-enabled services with an innovative subscription model that will generate recurring revenues,” van Houten added.

Philips said the planned spinout of its legacy lighting division, either via a sale to another company or an eventual stock market flotation, is expected to cost between $222 million and $333 million (€200 million to €300 million) this year , lower than a prior forecast of $333 million to $444 million (€300 million to €400 million). Another $222 million to $333 million are expected in other separation and restructuring costs, Philips said.

PHG shares were up 3.4% to $27.28 apiece today in early trading.

(€1 = $1.10976)

Material from Reuters was used in this report.

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