Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Philips third-quarter results top estimates on strong COVID-19 demand

Published 19/10/2020, 06:21
© Reuters. FILE PHOTO: Dutch health technology company Philips's logo is seen at company headquarters in Amsterdam
PHG
-

AMSTERDAM (Reuters) - Health technology company Philips (AS:PHG) on Monday reported much better-than-expected third-quarter results, as the coronavirus pandemic spurred demand for hospital equipment needed to help patients battling the disease.

Amsterdam-based Philips said comparable sales rose 10% to 4.98 billion euros (4.51 billion pounds), driven by a 42% increase in sales of the connected care division, which makes monitoring and respiratory care devices used to treat COVID-19 patients.

Adjusted earnings before interest, taxes and amortisation (EBITA) increased to 769 million euros in the July-September period, easily beating the 630 million euros predicted by analysts in a company-compiled poll.

"I am pleased that under challenging circumstances, we have been able to return to growth and improved profitability", Chief Executive Frans van Houten said.

Philips' results were hit hard in the first half of 2020, as the global spread of COVID-19 caused hospitals to delay the installation of new equipment and crippled demand for consumer products.

But as the first shock of the pandemic waned, hospitals rushed to buy equipment needed to treat the disease, while consumers bound to their homes increased demand for personal care products and domestic appliances.

NEW TARGETS

In an update of its targets, Philips said it expected average sales growth of 5% to 6% per year between 2021 and 2025, with the adjusted EBITA margin improving by 60 to 80 basis points each year.

The company's profit margin jumped to 15.4% in the third quarter, up from 12.4% a year earlier, and is now expected to reach the "high teens" by 2025, it said.

For 2021, however, Philips predicted "low-single-digit growth", as demand for COVID-19 equipment is expected to cool down.

Philips cut its outlook for 2020 in August, after the U.S. Department of Health cancelled most of an order for 43,000 ventilators.

The company on Monday maintained its outlook for moderate sales growth and a stable EBITA margin for the whole of this year.

© Reuters. FILE PHOTO: Dutch health technology company Philips's logo is seen at company headquarters in Amsterdam

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.