Philips Betting on Rebound to Help Keep 2020 Target in Sight

(Bloomberg) -- Royal Philips NV said demand for ventilators used to treat Covid-19 patients in intensive care and a recovery in spending on other hospital equipment will help the Dutch company meet a target for revenue growth this year.

• The maker of body scanners and electric toothbrushes reported earnings before interest, taxes and amortization of 418 million euros ($478 million) in the second quarter, beating an average estimate of 363.9 million euros. Philips shares jumped.

Key Takeaways

• Philips has been center-stage as the pandemic spread. It invested more than 100 million euros on tripling ventilator production amid a huge surge in demand for ventilators. Orders are still flooding in, particularly in emerging markets and the U.S., current hotspots, Chief Executive Officer Frans van Houten said.
• As Europe and other areas start to contain the outbreak, Van Houten is hoping hospital spending on medical equipment and personal-care products will now resume. That’s already the case in Europe, which is starting to see demand come back, he said in a Bloomberg interview.
• The CEO reiterated a target for a “modest” gain in sales growth in 2020 and an improvement in its profit margin.
• The Dutch company aims to complete the sale of a kitchen-appliance business generating 2.3 billion euros ($2.5 billion) in sales by the summer of 2021, the CEO said on a call, adding that there’s “a lot of interest” in the unit.

Know More

• The stock gained 3% to 44.74 euros as of 9:06 a.m. in Amsterdam.
• Philips reported a 6.1% decline in comparable sales, compared with a -8% estimate. Despite an initial rebound, demand in China is still short of 2019 levels, the CEO said.
• For more on earnings, click here.

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