Philips Healthcare (NYSE:PHG) saw its profits rise at significant double-digit clip during the 4th quarter and 2013, despite declining sales.
The world’s 5th-largest medical device business put up operating profits of €477 million ($651.8 million) on sales of €2.83 billion ($3.86 billion) for the 3 months ended Dec. 31, for a profit gain of 32.1% on a 3.1% sales slide.
Full-year profits for Philips Healthcare reached €1.32 billion ($1.80 billion) on sales of €9.58 billion ($13.08 billion), for a profit increase of 28.2% on a 0.5% sales decline.
"The 4th quarter of 2013 was another good quarter for Philips, despite the challenging economic environment and ongoing currency headwinds. In the quarter, Lighting and Consumer Lifestyle both delivered strong comparable sales growth of 8%. At Healthcare, comparable sales increased by 4%, while order intake declined 1% as a result of weak markets in the US and Europe. The operational profitability of all sectors improved substantially, driven by good sales growth, gross margin expansion of 2 percentage points and productivity gains, all coming from the Accelerate! program," CEO Frans van Houten said in prepared remarks. “Achieving the 2013 financial targets was an important milestone and we have now set our sights on reaching our 2016 targets. We are confident in our ability to further improve our performance by continuing the strong focus on our Accelerate! transformation program. Looking at 2014, we remain cautious because of ongoing macro-economic uncertainties, currency headwinds and softer order intake in Q4 2013. Therefore, we expect that 2014 will be a modest step towards our 2016 targets, also taking into account restructuring to drive the new productivity targets and investments in additional growth initiatives."
Philips said it employed 1,393 fewer workers compared with Q4 2012, including 705 employees who left due to divestitures.
"Excluding divestments, the number of employees decreased by 688, mainly due to the company’s overhead reduction program and the industrial footprint rationalization at Lighting," according to a press release.