Philips Earnings Lower Than Expected But Healthcare Shines

by Barbara Kram, Editor | April 15, 2008

Healthcare was a winner
in Philips' business portfolio

Philips has announced results of its first quarter 2008 performance. While net results were lower than expected, Healthcare was a shining light for the company's business portfolio.

Philips orders for Healthcare equipment during the first quarter grew 9%, including double-digit growth in North America, which was driven mainly by MR, Nuclear Medicine and C/V X-Ray.

Sales in Healthcare grew 5% on a comparable basis, driven by Home Healthcare, Clinical Care and Patient Monitoring. Home Healthcare grew due to organic growth in the Lifeline business, Clinical Care grew due to strong sales in the Ultrasound high-end segment and Cardiac Resuscitation products, while Patient Monitoring grew due to a strong Q4 finish in order intake. The impact of the growth of these businesses was moderated by a weaker performance at Imaging Systems, which despite growth in some key modalities, saw flat sales overall as the industry continues to feel the impact of the U.S. Budget Deficit Reduction Act.

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"I'm particularly pleased about the continuing progress in our Healthcare sector," said Gerard Kleisterlee, President and CEO of Royal Philips Electronics. "With the integration of Respironics, VISICU and Genlyte having started and our current share buy-back program in full swing, we are also in a position to reaffirm our confidence in achieving our Vision 2010 target of more than doubling our EBITA per share and to upgrade our EBITA margin target to 10 - 11%."

A few Q1 highlights for Healthcare include:
- Strategic acquisitions of Shenzhen Goldway Industrial in China (see DOTmed Online News story at www.dotmed.com/news/story/5784) to strengthen its position in emerging markets and TOMCAT Systems in Northern Ireland to expand its Healthcare Informatics business unit, as well as completing the acquisition of Respironics, the global leader in Obstructive Sleep Apnea treatment.

- Philips Research announced that it will spearhead the HeartCycle consortium, one of the largest biomedical and healthcare research projects in the U.S.

-The installation of its 50th Ambient Experience suite at Fairview Hospital in Cleveland, Ohio

During the next twelve months, Philips expects the global healthcare market to grow 3-4% in the long term. The company itself expects to grow slightly faster than the market.