By Anthony O. Goriainoff
Royal Philips, the Dutch health-technology company, has announced an upward revision of its guidance for 2023 following a significant increase in group sales during the second quarter. While some analysts consider the guidance upgrade to be cautious, it aligns with the company’s impressive second-quarter performance, according to experts from Citigroup.
Previously, Royal Philips projected low-single-digit organic sales growth for the year. However, the company now expects mid-single-digit growth, which is in line with consensus expectations. The revised guidance, which includes an anticipated adjusted Ebitda margin at the upper end of the high-single-digit range, indicates the company’s confidence in its future prospects. Despite already capturing consensus estimates, analysts suggest there may still be room for further upgrades.
During the second quarter, Royal Philips reported sales of 4.47 billion euros ($4.97 billion), representing an increase from EUR4.18 billion in the same period last year. The rise in sales can be attributed to improved performance, increased royalty income, and productivity measures. Adjusted earnings before interest, taxes, depreciation, and amortization rose to EUR681 million, marking a significant improvement from EUR461 million in the previous year. Income from operations surged to EUR221 million compared to EUR11 million in the corresponding period.
Royal Philips mentioned that its order book continued to expand on a yearly basis. However, comparable order intake fell slightly due to exceptionally high levels reported in the second quarter of 2022.
The company stressed that its updated outlook does not include the impact of ongoing discussions regarding a proposed consent decree or any potential implications arising from litigation or the investigation by the U.S. Department of Justice related to the Respironics field action.
At 0835 GMT, Royal Philips’ shares experienced a decline of EUR1.42, equivalent to 6.8%, trading at EUR19.41.
