Philips (PHG 36.60, -3.35, -8.39%) slumped 6.7% in pre-market after
reporting weaker than expected results for the third quarter. The early
weakness pressured the stock to its lowest level in more than six months.
The Dutch conglomerate reported below-consensus third quarter earnings of EUR0.32 per share on revenue, which grew 3.8% year/year to EUR4.31 bln but was shy of expectations.
Comparable sales increased 4% while comparable order intake grew 11%. Adjusted EBITDA grew 6.8% year/year to EUR568 mln. Adjusted EBITDA accounted for 13.2% of total sales, up from 12.8% one year ago.
The company saw continued strength in its Diagnosis & Treatment businesses while the Connected Care & Health Informatics segment saw lower sales. Personal Health sales increased, though not as much as the company had expected. Lower growth in mature geographies partially offset solid increases in growth geographies.
Even with this quarter's shortfall, the company continues expecting that comparable sales between 2017 and 2020 will show an average increase between 4% and 6% with adjusted EBITDA margin improving by about 100 basis points per year.
Looking at the segment breakdown, Diagnosis & Treatment revenue grew 7.0% to EUR1.75 bln. Nominal sales grew 7% while comparable sales increased 6% due to double-digit growth in Ultrasound, high-single-digit growth in Image-Guided Therapy, and mid-single-digit growth in Diagnostic Imaging. Sales in China, the Middle East, and Turkey increased at a double-digit pace while mature geographies saw mid-single-digit growth. Segment adjusted EBITDA made up 15.1% of sales, up from 13.7% of sales one year ago.
Connected Care & Health Informatics revenue declined 1% to EUR741 mln while comparable sales fell 2%. Mid-single-digit growth in Therapeutic care was offset by a low-single-digit decline in Healthcare Informatics and Monitoring & Analytics. Sales in Latin America increased at a mid-single-digit rate while sales in China declined at a low-single-digit pace. Double-digit growth in Western Europe was offset by a mid-single digit decline in North America and other mature geographies. Segment adjusted EBITDA represented 15.1% of sales, down from 16.5% of sales one year ago.
Personal Health nominal sales increased 2% to EUR1.68 bln while comparable sales grew 4%. Mid-single-digit growth in Personal Care and Sleep & Respiratory Care drove the overall growth rate. Sales in China and in Central & Eastern Europe grew at a double-digit pace while sales in the Middle East and Turkey declined at a double-digit rate. There was no overall growth in mature geographies. Segment adjusted EBITDA made up 20.1% of sales, up from 19.8% one year ago.
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