The Dutch healthcare conglomerate reported profits of €246 million ($276.0 million), or €0.27 (30¢) per share, on sales of €4.67 billion ($5.24 billion) for the three months ended June 30. That amounts to a 12,200% bottom-line gain on sales growth of 8.9% compared with Q2 2018.
Adjusted to exclude one-time items, earnings per share rose 22.9% to €0.43 (48¢).
“I am pleased with the 6% comparable sales growth in the second quarter, with all businesses contributing. We also recorded strong 8% comparable order intake growth, driven by the continued demand for our innovative product portfolio across the diagnosis & treatment businesses. Adjusted EBITA margin for the group improved by 60 basis points, mainly driven by the performance improvement of the diagnosis & treatment businesses, despite adverse currency and tariff impacts. We continue to expect our performance momentum to further improve in the second half of the year, supported by sales growth and our productivity programs. We maintain our overall targets of 4-6% comparable sales growth and an Adjusted EBITA margin improvement of 100 basis points on average per year for the 2017-2020 period,” CEO Frans van Houten said in prepared remarks.
Philips also said it expects tariffs from the U.S. trade war with China to deliver a €45 million ($50.5 million) earnings hit this year.
“The main cloud hanging over us is the possible fourth batch of tariffs,” van Houten told the Associated Press. “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.”
The FDA asked Philips for more information about its emergency care and resuscitation business, which the federal safety watchdog shut down in November 2017. The FDA barred Philips from producing and distributing AEDs made at its Andover, Mass. and Bothell, Wash.-based facilities until they return to compliance with FDA regulations (export sales are still happening and Philips still sells the H1/ OnSite/Home automated external defibrillator here, as well as providing service and consumables for its AEDs).
“Philips continues to fulfill its obligations under the consent decree,” the company said. “The U.S. Food & Drug Administration reverted to Philips with follow-up requests, on which the company is currently acting.”
PHG shares were up 2.3% to $45.78 apiece today in mid-morning trading in New York City; PHIA shares gained 4.9% in late-day activity in Amsterdam, rising to €40.83 each.
($1 = €0.891329)
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