Dutch firm Philips tops quarterly sales estimates as growth picks up

Dutch firm Philips tops quarterly sales estimates as growth picks up

FILE PHOTO:  Dutch health technology company Philips presents the company's financial results
FILE PHOTO: Dutch technology company Philips' logo is seen at company headquarters in Amsterdam, Netherlands, January 29, 2019. REUTERS/Eva Plevier/File Photo

AMSTERDAM: Dutch health technology company Philips on Monday (Jul 22) reported a better-than-expected six per cent rise in comparable sales for the second quarter, helped by strong demand for its hospital equipment in China and the United States.

Philips, which sells products ranging from toothbrushes to medical imaging systems, also held on to its forecast of solid growth throughout the year as it reported an 8% increase in new orders.

Philips shares were up 3.5 per cent in early trading in Amsterdam, putting them among the top gainers in the Stoxx600.

"We saw growth in all our segments in the second quarter and we expect that to continue", Chief Executive Frans van Houten told reporters.

"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."

Philips, which has focused on healthcare since spinning off its lighting and consumer electronics divisions, reaffirmed its target for total comparable sales growth of four per cent to six per cent per year until 2020.

The company said the trade disputes between the US and China were its main source of concern, as both its end products and components are hit by new tariffs.

"The main cloud hanging over us is the possible fourth batch of tariffs," Van Houten said. "If that would happen, it would increase the amount by which our earnings are hit by €20 million this year, but nobody knows whether it will happen."

Philips currently expects tariffs to shave €45 million off its 2019 core earnings.

Analysts polled by the company had seen adjusted sales growth of 4.5 per cent in the second quarter, compared with a four per cent increase in the same period last year.

Sales in the April-June period rose to €4.67 billion (US$5.24 billion), while adjusted earnings before interest, taxes and amortisation (EBITA) jumped 14 per cent to €549 million, roughly meeting expectations.

Source: Reuters