Philips Q4 Income From Opns Down; To Halt Sleep Devices Sale In US; Stock Dips

(RTTNews) - Shares of Philips Electronics NV were losing more than 6 percent in the morning trading in Amsterdam as well as in pre-market activity on the NYSE after the Dutch consumer electronics giant reported Monday a drop in fourth-quarter income from operations amid weak sales. However, the company recorded a net income, compared to last year's loss, mainly driven by lower tax charges.

Further, the firm said it is halting the sale of ventilators and sleep apnea breathing-assist machines in the United States as part of its Respironics consent decree, a multi-year plan, with the US Department of Justice or DOJ, representing the US Food and Drug Administration.

Further, Philips said it intends to submit to the 2024 Annual General Meeting of Shareholders a proposal to maintain dividend at 0.85 euro per share, to be distributed in shares.

Looking ahead for fiscal 2024, Philips expects to deliver 3-5 percent comparable sales growth and adjusted EBITA margin of 11-11.5 percent in 2024. Adjusted EBITA margin was 10.6 percent in 2023. In 2024, Philips expects around 100 basis points of costs that relate to remediation activities and disgorgement payments for Philips Respironics sales in the US.

Further, Philips reiterated its plan for 2023-2025, continuing to expect mid-single-digit comparable sales growth, low-teens Adjusted EBITA margin, and 1.4 billion euros to 1.6 billion euros free cash flow. It excludes the investigation by the US DOJ related to the Respironics field action and the impact of the ongoing litigation.

Regarding the consent decree focused on Philips Respironics in the US, the company said the agreement provides clarity and a roadmap to demonstrate compliance and to restore the business. The consent decree is being finalized and will be submitted to the relevant US court for approval.

In the US, until the relevant requirements of the consent decree are met, Philips Respironics will not sell new CPAP or BiPAP sleep therapy devices or other respiratory care devices.

It will continue to service sleep and respiratory care devices already with healthcare providers and patients, and supply accessories, consumables, and replacement parts in the country.

Outside the US, Philips Respironics will continue to provide new sleep and respiratory care devices, accessories, consumables, replacement parts and services, subject to certain requirements.

Philips further said it has reduced the workforce by around 8,000 roles, out of 10,000 roles in total planned by 2025.

In its fourth quarter, net income was 38 million euros, compared to loss of 105 million euros last year. Earnings per share were 0.04 euro, compared to loss of 0.11 euro a year ago.

The latest results included, among others things, charges of 363 million euros connected with the Respironics consent decree related to remediation activities, inventory write-downs and onerous contract provisions.

Adjusted income from continuing operations attributable to shareholders was 0.41 euro, compared to 0.39 euro a year earlier.

Income from operations, meanwhile, fell to 24 million euros from last year's 171 million euros, including charges of connected with the Respironics consent decree.

Adjusted EBITA margin was 12.9 percent in the quarter. Adjusted EBITA margin was 12.5 percent, excluding provisions charged to sales, mainly connected with the Respironics consent decree, compared to 12 percent last year.

Group sales amounted to 5.06 billion euros, 7 percent lower than last year's 5.42 billion euros. Sales were down 1 percent on a comparable basis. Comparable sales growth excluding provisions charged to sales was 3 percent in the quarter.

Comparable order intake was down 3 percent.

Segment wise, Diagnosis & Treatment segment comparable sales increased 5 percent, with high-single-digit growth in Image Guided Therapy.

Connected Care comparable sales were flat in the quarter, while Personal Health comparable sales increased by 7 percent, mainly driven by Personal Care.

In Amsterdam, Philips shares were trading at 19.70 euros, down 6.39 percent. In pre-market activity on the NYSE, Philips shares were losing around 7 percent to trade at $21.19.

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