Philips' performance impacted by headwinds, order book strength and improving component supplies expected to deliver growth
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| July 25, 2022
July 25, 2022 -- Highlights
Group sales amounted to EUR 4.2 billion, with a 7% comparable sales decline mainly caused by continued supply shortages and prolonged lockdowns in China, on the back of 9% comparable sales growth in Q2 2021
Order book remains strong; comparable order intake increased 1% and includes a 5 percentage-points negative impact related to China
Income from operations amounted to EUR 11 million, compared to EUR 85 million in Q2 2021
Adjusted EBITA of EUR 216 million, or 5.2% of sales, compared to EUR 532 million, or 12.6% of sales, in Q2 2021
Operating cash flow was an outflow of EUR 306 million, mainly due to temporarily higher inventories, compared to an inflow of EUR 332 million in Q2 2021
In connection with the field action for specific CPAP, BiPAP and mechanical ventilator devices, Philips Respironics has produced 3 million replacement devices and repair kits to date, and published encouraging test results for the first-generation DreamStation devices
Comprehensive measures in place to improve supply chain resilience and pricing; productivity program increased to EUR 500 million per year through 2025
Company has revised full-year 2022 outlook to 1-3% comparable sales growth and around 10% Adjusted EBITA margin, driven by 6-9% comparable sales growth in the second half of 2022
For the 2023-2025 period, Philips has provided a revised performance improvement trajectory of 4-6% average annual comparable sales growth, and an Adjusted EBITA margin of 14-15%, as well as a free cash flow of around EUR 2 billion by 2025
Frans van Houten, CEO of Royal Philips:
"Across our businesses, we have stepped up our actions on productivity, pricing, and strengthening supply chain resilience to mitigate the ongoing headwinds and associated risks. The positive impact of these actions, together with the strength of our order book and improving component supplies, give me confidence that we will resume growth from the third quarter onwards, resulting in 6-9% comparable sales growth and improved profitability in the second half of the year. For the full-year 2022, we expect to deliver 1-3% comparable sales growth and around 10% Adjusted EBITA margin.
Our products remain in good demand, as evidenced by the further growth of our already strong order book, confirming the relevance of our strategy and portfolio of innovations to our customers. In the second quarter, comparable order intake increased 1% and includes a 5 percentage-points negative impact related to China. We partnered with 19 more hospital groups to help them transform the delivery of care and boost staff productivity. In our Personal Health businesses, we delivered a second consecutive quarter of double-digit comparable sales growth in North America.
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