Philips gains on Q1 results

Royal Philips (NYSE:PHG) shares closed up today in Amsterdam and had gained nearly 5% on Wall Street after the Dutch healthcare conglomerate reported better-than-expected profit numbers for the first quarter.

Philips posted profits of €124 million ($151.5 million), or €0.13 per share, on sales of €3.94 billion ($4.81 billion), for a bottom-line slide of -52.1% compared with Q1 2017. But adjusted earnings before interest, tax & amortization were €344 million ($420.2 million), well above analysts’ consensus for adjusted EBITA of €332 million ($405.5 million).

That sent PHIA.AS shares up 5.3% to a €34.67 close today in Amsterdam; in New York, PHG shares were up 4.5% to $42.42 apiece today in mid-day activity.

“While there is more work to be done, 2018 started well, with 10% comparable order intake growth, 5% comparable sales growth and a 130-basis-point improvement in operational profitability. Good traction of new products and solutions introduced last year contributed to 9% comparable sales growth in the diagnosis & treatment businesses. Across our markets, we continue to see strong customer interest in our innovations, as demonstrated by the mid-teens order intake growth in the diagnosis & treatment businesses. In the quarter, we continued to make good progress with our productivity programs and took action to further reduce our interest expenses,” CEO Frans van Houten said in prepared remarks. “Looking ahead, we reiterate our targets for the 2017–2020 period of 4-6% comparable sales growth and an average annual 100 basis points improvement in adjusted EBITA margin.”

Consent decree with FDA over AEDs delivers $24m blow; China trade war could deliver another

Philips said the consent decree it inked last fall with the FDA, banning automated external defibrillator production at facilities in Massachusetts and Washington state until they return to compliance with FDA regulations, delivered a €20 million ($24.4 million) charge for the quarter. Shipment of some AEDs overseas is back under way, the company said today.

“Philips continues to make progress in line with the terms of the consent decree, which is primarily focused on the defibrillator manufacturing in the U.S.; this included inspections by independent auditors and resumption of shipments of its FRx and FR3 AEDs to markets outside of the U.S.,” the company said.

Philips is also keeping a wary eye on the potential for a trade war between the U.S. and China, which drove some of the company’s strongest growth during the quarter.

“So far the effects are modest, but we are worried about the trade tensions,” van Houten told Reuters. “We don’t expect any tariffs to be imposed on medical equipment, but we see indirect effects through the rising cost of commodities such as aluminum and steel. We can’t isolate ourselves from that, nor from the effects on economic confidence overall.”

($1 = €0.818737)

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