Philips shares rise on Q1 earnings beat, despite slow sales growth

Royal Philips (NYSE:PHG) shares have risen nearly 5% today after the medical device and healthcare product maker posted 1st quarter earnings that beat expectations on The Street, despite weak sales growth.

The Amsterdam-based company posted profits of $281 million (EU €259 million), or 27¢ (EU €0.25) per share, on sales of $6.2 billion (EU €5.7 billion) for the 3 months ended March 31, for a massive 600% growth on the bottom-line while sales grew 3.8% compared with the same period in 2016.

Philips saw its sales rise 3% for its healthcare-linked businesses, falling below its guidance of between 4 and 6% sales growth annually.

“We had a solid start to the year, with 2% group comparable sales growth and a 90-basis-point improvement in the adjusted EBITA margin. Despite continued volatility in the markets in which we operate, our HealthTech portfolio grew 3% and achieved further operational improvements, resulting in an 80-basis-point increase in the adjusted EBITA margins. Our diagnosis & treatment businesses and our personal health businesses delivered strong margin improvements, while our connected care & health informatics businesses reflected the unevenness of sales from large hospital informatics deals. Comparable order intake growth was 2%, driven by mid-single-digit growth in the diagnosis & treatment businesses,” CEO Frans van Houten said in a press release.

Among its 3 divisions, the company reported 5% growth at its personal health arm, which sells consumer products including toothbrushes as well as machines to relieve sleep apnea.

Its diagnosis & treatment division, which sells high-end medical scanners and imaging tools used during surgery, saw sales rise by 2%.

Its connected care and informatics business, which includes patient monitoring systems and software used by hospitals to gather and analyze data, reported a 1% rise in sales.

The company chose not to update its outlook for the rest of the year, maintaining previous 2017 guidance.

“Our outlook for 2017 remains unchanged as we expect further operational improvements and comparable sales growth in the year to be back-end loaded,” Houten said in a prepared statement.

Shares have risen approximately 4.7% in trading today so far, at $34.17 as of 12:14 p.m. EST.

Material from Reuters was used in this report.

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