Philips provides update on its financial performance in Q3 2022
12 October 2022 - 4:00PM
Philips provides update on its financial performance in Q3 2022
October 12, 2022
Amsterdam, the Netherlands – Royal Philips
(NYSE: PHG, AEX: PHIA), a global leader in health technology, today
provided an update on its third-quarter 2022 financial results and
full-year outlook. The company will report the final results on
October 24, 2022.
Group sales and profitabilityPhilips’ financial
performance in the third quarter was largely impacted by continued
supply chain challenges that were more significant than anticipated
in the quarter, impacting deliveries and customer installations. As
a result, sales for the Group are expected to be approximately EUR
4.3 billion with a comparable sales decline of approximately 5%.
Philips’ Diagnosis & Treatment businesses are expected to show
a low-single-digit comparable sales decline and the Connected Care
businesses a mid-teen decline, while the Personal Health businesses
are expected to show mid-single-digit comparable sales growth. As a
consequence of the lower sales, Group Adjusted EBITA for the
quarter is expected to be approximately EUR 210 million or
approximately 5% of sales.
On the back of strong 47% comparable order intake growth in the
third quarter of last year, Philips’ comparable order intake in the
third quarter of 2022 declined approximately 6%. The book-to-bill
ratio remained strong at 1.18 and the equipment order book grew
further in the quarter.
Goodwill impairment chargePhilips expects to
record a EUR 1.3 billion non-cash charge in the third quarter for
the impairment of goodwill of its Sleep & Respiratory Care
business (Philips Respironics) due to revisions to the financial
forecast of this business. The drivers for the revised forecast
include current assumptions regarding the estimated impact of the
proposed consent decree and changes to the pre-tax discount
rate.
Actions to improve performance and resulting
chargesPhilips is accelerating productivity initiatives
and other actions to mitigate the ongoing headwinds, that will be
further detailed on October 24, 2022. As a consequence of the
earlier announced initiative to enhance productivity in R&D by
shifting the focus to fewer and better resourced projects in the
innovation pipeline, Philips expects to record a non-cash charge in
the third quarter of approximately EUR 165 million.
OutlookLooking ahead, Philips still expects a
better second half of the year, compared to the first half of 2022.
However, the company sees prolonged supply chain disruptions and a
worsening macro-environment. Consequently, Philips now expects a
mid-single-digit comparable sales decline for the fourth quarter of
2022 with a high-single-to-double-digit adjusted EBITA margin
range.
Conference call and audio webcastPhilips will
host a conference call for investors and analysts from 08:30 –
09:00 am CET today to discuss the third-quarter financial
performance update.
Comparable sales exclude the effect of currency movements and
acquisitions and divestments (changes in consolidation). Philips
believes that comparable sales information enhances understanding
of sales performance.Adjusted EBITA is defined as Income from
operations (EBIT) excluding amortization of acquired intangible
assets, impairment of goodwill and other intangible assets,
restructuring charges, acquisition-related costs and
other one-time charges and gains.
For further information, please
contact:
Ben ZwirsPhilips Global Press OfficeTel.: +31 6 15213446E-mail:
ben.zwirs@philips.com
Derya GuzelPhilips Investor RelationsTel.: +31 20 59
77055E-mail: derya.guzel@philips.com
About Royal PhilipsRoyal Philips (NYSE: PHG,
AEX: PHIA) is a leading health technology company focused on
improving people's health and well-being, and enabling better
outcomes across the health continuum – from healthy living and
prevention, to diagnosis, treatment and home care. 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 in consumer health and home care. Philips generated 2021
sales of EUR 17.2 billion and employs approximately 79,000
employees with sales and services in more than 100 countries. News
about Philips can be found at www.philips.com/newscenter.
Forward-looking statements This release
contains certain forward-looking statements with respect to the
financial condition, results of operations and business of Philips
and certain of the plans and objectives of Philips with respect to
these items. Examples of forward-looking statements include
statements made about the strategy, estimates of sales growth,
future EBITA, future developments in Philips’ organic business and
the completion of acquisitions and divestments. By their nature,
these statements involve risk and uncertainty because they relate
to future events and circumstances and there are many 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.
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