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Amsterdam, The Netherlands – Royal Philips (NYSE: PHG, AEX: PHIA), a leading global health technology company, today provided an update on its third-quarter 2022 financial results and full-year outlook. The company will announce final results on October 24, 2022.
Group sales and profitability
Philips’ third-quarter financial results were largely impacted by ongoing supply chain challenges that were more severe than expected during the quarter, affecting deliveries and customer installations. As a result, Group sales are expected to be around EUR 4.3 billion, with comparable sales down around 5 percent. Philips’ Diagnostics and Therapeutics business is expected to report a low-single-digit comparable sales decline, its Connected Care business is expected to report a mid-10-year decline, and its Personal Health business is expected to report mid-single-digit comparable sales growth. Due to lower sales, Group Adjusted EBITA for the quarter is expected to be approximately EUR 210 million, or approximately 5% of sales.
In the third quarter of 2022, Philips recorded a decline of about 6% in comparable orders, against the backdrop of a strong 47% increase in comparable orders in the third quarter of last year. The book-to-bill ratio remained strong at 1.18, with equipment orders growing further in the quarter.
Goodwill impairment charges
Philips expects to record a non-cash charge of EUR 1.3 billion in the third quarter for the impairment of goodwill in its Sleep and Respiratory Care business (Philips Respironics) due to revisions to its financial forecast for this business. Drivers for the revised forecast include current assumptions about the estimated impact of the proposed consent decree and changes in the pre-tax discount rate.
Measures to improve performance and resulting costs
Philips is accelerating productivity initiatives and other actions to mitigate current headwinds, which will be further detailed on October 24, 2022. Philips expects non-cash charges of approximately EUR 165 million in the third quarter due to earlier announced initiatives to increase R&D productivity by shifting focus to fewer and better-resourced projects in the innovation pipeline.
appearance
Going forward, Philips still expects a better second half compared to the first half of 2022. However, the company expects longer supply chain disruptions and a worsening macro environment. As a result, Philips now expects a mid-single-digit decline in comparable sales in the fourth quarter of 2022 and an adjusted EBITA margin in the single-digit to double-digit range.
Conference Calls and Audio Webcasts
Philips will host an investor and analyst conference call today from 08:30 am to 09:00 am CET to discuss the third quarter financial results update.
Comparable sales exclude the effects of currency changes and acquisitions and divestments (changes in mergers). Philips believes that comparable sales information provides a better understanding of sales performance. Adjusted EBITA is defined as income from operations (EBIT) and excludes amortization of acquired intangibles, impairment of goodwill and other intangibles, restructuring charges, acquisition-related costs and other one-time charges and gains.
About Royal Philips
Royal Philips (NYSE: PHG, AEX: PHIA) is a leading health technology company focused on improving people’s health and well-being, and across the health journey from healthy living and prevention to diagnosis, treatment and home care achieve better results. Philips leverages advanced technology and deep clinical and consumer insights to deliver integrated solutions. Headquartered in the Netherlands, the company is a leader in diagnostic imaging, image-guided therapy, patient monitoring and health informatics, as well as consumer health and home care. With 2021 sales of EUR 17.2 billion, Philips has approximately 79,000 employees, sales and service in more than 100 countries.For Philips news, visit www.philips.com/newscenter.
forward-looking statements
This press release contains certain forward-looking statements regarding Philips’ financial condition, results of operations and business, as well as certain Philips plans and objectives with respect to these items. Examples of forward-looking statements include statements regarding strategy, sales growth estimates, future EBITA, future development of Philips’ organic business and the completion of acquisitions and divestments. By their nature, these statements involve risks and uncertainties as they relate to future events and circumstances, and there are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these statements.
This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
Ben Zweis
Philips Global Press Office
Tel: +31 6 1521 3446
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Delia Guzel
Philips Investor Relations
Tel: +31 20 59 77055
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