Philips Posts Q4 Loss, Plans 6,000 Job Cuts, Sees Growth Ahead; Stock Up

Dutch consumer electronics giant Philips Electronics NV reported Monday a loss in its fourth quarter, compared to prior year’s profit, even as sales increased. The company further declared a dividend, and said its order book remains strong. Going ahead, the company projects comparable sales growth in fiscal 2023, 2025, and beyond.

Separately, Philips announced its plans to reduce workforce by an additional 6,000 roles globally by 2025. Of this, 3,000 will be implemented in 2023 in line with the relevant local regulations and processes.

Philips shares were gaining around 6 percent in the early morning trading in Amsterdam as well as in the pre-market activity on the NYSE.

The planned job cuts are in addition to the 4,000 job cuts announced in October 2022 and being implemented as planned.

Philips further announced that effective February 6, Steve de Baca has been appointed as Chief Patient Safety & Quality Officer and member of Philips’ Executive Committee reporting to CEO Roy Jakobs.

Additionally, Jeff DiLullo has been promoted as the new Chief Market Leader of Philips North America. Effective February 6, DiLullo will succeed Vitor Rocha, who has decided to leave Philips.

Further, Philips said it intends to declare a dividend of 0.85 euro per share.

Looking ahead, a slow start is expected for the year 2023 considering the slowing of consumer demand and a gradual improvement of the order book conversion. The company sees improvements throughout the year supported by the ongoing productivity, pricing and other actions.

For fiscal 2023, Philips expects to deliver low-single-digit comparable sales growth and high-single-digit adjusted EBITA margin.

Going further ahead, the company projects mid-single-digit comparable sales growth with a low-teens adjusted EBITA margin by 2025, and mid-single-digit comparable sales growth and mid-to-high-teens Adjusted EBITA margin beyond 2025.

In the fourth quarter, the company’s net loss was 105 million euros, compared to last year’s profit of 151 million euros. Loss per share was 0.12 euro, compared to profit of 0.18 euro a year ago.

Loss from continuing operations attributable to shareholders was 0.13 euro, compared to last year’s profit of 0.16 euro. Adjusted earnings per share from continuing operations was 0.41 euro, compared to 0.57 euro a year ago.

Income from operations, however, grew to 171 million euros from prior year’s 162 million euros.

Adjusted EBITA was 651 million euros or 12.0 percent of sales, compared to 647 million euros or 13.1 percent of sales a year earlier.

Group sales amounted to 5.42 billion euros, 10 percent higher than last year’s 4.94 billion euros.

The company generated 3 percent comparable sales growth driven by component supply improvements, while Philips’ supply chain conditions remain challenging.

Connected Care and Diagnosis & Treatment businesses recorded mid-single-digit growth, while the Personal Health businesses posted a mid-single-digit decline.

In the quarter, sales in mature geographies increased 6 percent, driven by midsingle-digit growth in North America and Western Europe and double-digit growth in other mature geographies. Meanwhile, sales fell 2 percent in growth geographies on a comparable basis, mainly due to China.

Order book remains strong, while comparable order intake was down 8 percent in the quarter mainly with a double-digit decline in the Connected Care businesses. The results reflected lower demand for COVID-19-related products compared to 2021. Further, there was a high-single-digit decline in the Diagnosis & Treatment businesses, mainly due to actions to improve the order book margin profile.

In Amsterdam, Philips shares were trading at 16.45 euros, up 5.71 percent. In pre-market activity on the NYSE, the shares were trading at $17.98, up 5.83 percent.

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