Philips gains on strong Q2 results

Royal Philips (NYSE:PHG) shares are up today after the Dutch healthcare conglomerate said core second-quarter profits rose nearly 15% to $512.31 million (€439 million), just beating the consensus forecast.

The Amsterdam-based company, which spun off its lighting division last year to focus on medical devices and healthcare product, said sales grew 4% to $5.01 billion (€4.29 billion) on “strong” order intake.

Analysts were looking for adjusted earnings before interest, taxes, and amortization (EBITA) of $511.1 million (€438 million).

“Philips’ performance in the second quarter of 2017 was solid, with 4% comparable sales growth in our HealthTech portfolio driven by Western Europe, North America and China, and a strong 8% increase in our order intake. We achieved a 90-basis-point increase in the Adjusted EBITA margin, driven by higher volumes, operational improvements and cost productivity,” CEO Frans van Houten said in prepared remarks. “Despite continued volatility in the markets in which we operate, our outlook for 2017 remains unchanged as we expect further operational improvements and comparable sales growth in the year to be back-end loaded, supported by a strong order book. We are on track to deliver 4% to 6% comparable sales growth and an improvement in adjusted EBITA margin of around 100 basis points per year.”

Investors here and in Europe responded by sending share prices up today. In Amsterdam, PHIA shares jumped 3.0% to €31.92; the price rose 3.2% to $36.08 each in pre-market trading in New York.

During a conference call with investors, van Houten added that Philips has had “no contact” with activist hedge fund Third Point, which bought a stake last month and could be gearing up for a proxy war.

“We don’t know whether they are shareholders or not,” van Houten said.

Although all divisions reported constant-currency sales growth, Philips said its personal health arm, which sells consumer products including toothbrushes as well as machines to relieve sleep apnea, delivered the strongest growth at 6%. Diagnosis & treatment, Philips’ imaging business, grew 3%, while connected care & informatics, which includes patient monitoring devices and software, rose 1%.

($1 = €0.8569)

Material from Reuters was used in this report.

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