Philips (PHG 42.09, -0.79, -1.84%) fell lower by 1.6% in pre-market
after matching earnings expectations on weaker than expected revenue.
The Dutch conglomerate reported in-line second quarter earnings of breakeven on a 0.1% year/year downtick in revenue to EUR4.29 bln, which was shy of estimates.
The revenue shortfall was partly due to lower sales of air purifiers in China.
Company-wide comparable sales grew 4% year/year while comparable orders increased 9% year/year. Adjusted EBITDA margin improved to 11.2% from 10.2% one year ago.
Looking at the segment breakdown, sales in the Diagnosis & Treatment businesses grew 5.4% to EUR1.76 bln with comparable sales increasing 8%. Comparable orders grew at a double-digit rate due to strong growth in China and North America. Comparable sales growth was fueled by strength in Image-Guided Therapy and Ultrasound. Segment adjusted EBITDA margin improved to 10.8% from 9.0% reported one year ago.
Connected Care & Health Informatics sales declined 3.3% to EUR743 mln. Comparable sales increased 2.0% due to strong growth in Healthcare Informatics and soft growth in Monitoring & Analytics. Therapeutic Care saw a low-single-digit decline due to a consent decree on defibrillator manufacturing in the U.s. Segment adjusted EBITDA margin grew to 8.9% from 8.5% one year ago.
Personal Health sales declined 3.8% to EUR1.69 bln, but comparable sales increased 2%. Strong growth in Sleep & Respiratory Care and modest growth in Personal Care were responsible for the uptick in comparable sales. Comparable sales in China declined significantly due to lower demand for air purifiers, resulting from improved environmental conditions. Segment adjusted EBITDA margin improved to 16.1% from 15.3% due to operational improvements.
Glancing at sales by geography, nominal sales in Western Europe declined 0.5% to EUR925 mln while comparable sales grew 2%. North American nominal sales declined 1.3% to EUR1.55 bln while comparable sales grew 2%. Sales in other mature geographies increased 2.8% to EUR408 mln while comparable sales increased 8%.
The company reiterated its annual targets for the period between 2017 and 2020. Philips expects comparable sales growth between 4% and 6% and steady annual improvement in adjusted EBITDA. The company expects to generate free cash flow between EUR1.00 bln and EUR1.50 bln on an annual basis.
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