Philips Q2 Profit Surges, Confirms FY24 View; Stock Climbs

(RTTNews) - Shares of Royal Philips NV were gaining around 11 percent in the morning trading in Amsterdam as well as in the pre-market activity on the NYSE after the Dutch consumer electronics giant reported Monday significantly higher profit in its second quarter benefited by insurance income related to the Respironics product liability claims, despite nearly flat sales. Further, the company maintained outlook for fiscal 2024.

Roy Jakobs, CEO of Royal Philips, said, "I am encouraged by our return to order intake growth this quarter, primarily driven by North America. Within a challenging macro environment we achieved strong margin improvement, supported by our productivity program, solid operational cashflow due to improved working capital management and comparable sales growth in line with our plan."

For fiscal 2024, Philips continues to expect 3 percent to 5 percent comparable sales growth, an adjusted EBITA margin of 11 percent to 11.5 percent, and free cash flow of 0.9 billion euros to 1.1 billion euros.

The company further reiterated its confidence in delivering the 2025 plan, acknowledging that uncertainties remain.

The outlook excludes the potential impact of the ongoing Philips Respironics-related legal proceedings, including the investigation by the US Department of Justice.

In its second quarter, Philips' net income attributable to shareholders surged to 451 million euros from last year's 72 million euros.

Earnings per share were 0.48 euro, up from 0.07 euro a year ago. Income from continuing operations per share was 0.33 euro in the latest quarter.

Adjusted income from continuing operations was 0.30 euro, compared to 0.27 euro a year ago.

The latest quarterly results were benefited by the 538 million euros insurance income related to the Respironics product liability claims.

Restructuring, acquisition-related and other items amounted to a net gain of 381 million euros, compared with a loss of 161 million euros a year ago.

Adjusted EBITA margin for the group increased to 11.1 percent from 10.1 percent last year, with improvement across all businesses.

Adjusted EBITDA grew to 733 million euros from 681 million euros last year. Adjusted EBITDA margin improved to 16.4% from prior year's 15.2%.

Group sales amounted to 4.462 billion euros, compared to last year's 4.470 billion euros. Comparable sales growth was 2 percent with growth in mature and growth geographies, which was partly offset by the decline in China.

Diagnosis & Treatment comparable sales increased 4%, and the growth was 2% in each of Connected Care as well as Personal Health segments' comparable sales.

Comparable order intake increased 9 percent. Philips noted that China remains a growth market with strong underlying demand while the government's anti-corruption measures continued to impact short-term hospital order lead times.

In Amsterdam, Philips shares were trading at 26.36 euros, up 11.04 percent.

In pre-market activity on the NYSE, the shares were trading at $28.53, up 10.8 percent.

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