Philips posts 9% rise in Q2 sales, with further growth expected in remainder of year

Headline results for the second quarter:

Revenue

€4.7 billion  ($5.3 billion; forecasts of €4.6 billion)

+9%

Profit

€246 million ($276 million)

Versus €2 million ($2.2 million)

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

"I am pleased with the 6% comparable sales growth in the second quarter, with all businesses contributing," remarked CEO Frans van Houten, with the figure coming in above analyst estimates of 4.5%. The executive added "we also recorded strong 8% comparable order intake growth, driven by the continued demand for our innovative product portfolio across the Diagnosis & Treatment businesses."

"We saw growth in all our segments in the second quarter and we expect that to continue," van Houten said, adding "we had strong traction in emerging markets among them China, and that is set to continue. Also, we expect mature markets to come in stronger in the second half of the year."

Other results:

  • Diagnosis & Treatment: €2.1 billion ($2.4 billion), +10%, with double-digit growth in image-guided therapy and high-single-digit growth in ultrasound, while diagnostic imaging remained flat
  • Personal Health: €1.4 billion ($1.6 billion), +5%, with high-single digit growth in oral healthcare and mid-single-digit growth in personal care and domestic appliances
  • Connected Care & Health Informatics: €1.2 billion ($1.3 billion), +11%, with mid-single-digit growth in monitoring & analytics and sleep & respiratory
  • Sales in mature markets: €3.2 billion ($3.6 billion), +10%, with mid-single-digit growth in Western Europe and North America, and high-single-digit growth in other mature geographies
  • Sales in growth markets: €1.5 billion ($1.7 billion), +7%, mainly driven by double-digit growth in China and high-single-digit growth in Central & Eastern Europe

Looking ahead:

"We continue to expect our performance momentum to further improve in the second half of the year, supported by sales growth and our productivity programmes," van Houten noted. The executive added that the company is maintaining its "overall targets of 4% to 6% comparable sales growth…on average per year for the 2017-2020 period."

However, Philips indicated that trade disputes between the US and China were its main source of concern, with van Houten suggesting that if the fourth batch of tariffs come into effect, "it would increase the amount by which our earnings are hit by €20 million ($22.4 million) this year, but nobody knows whether it will happen." The company currently expects tariffs to reduce its core earnings in 2019 by €45 million ($50.5 million).  

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