Philips' Fourth Quarter Results 2008 - Healthcare Sector

Royal Philips ElectronicsRoyal Philips Electronics (NYSE: PHG, AEX: PHI) has reported Q4 sales of EUR 7.6 billion. Healthcare showed strong Q4 sales growth of 9% and improved earnings; lower sales at Consumer Lifestyle and parts of Lighting reflect the challenging retail and automotive markets.

Gerard Kleisterlee, President and CEO of Royal Philips Electronics, has reported: "While we are very pleased with the excellent performance of Healthcare, our fourth-quarter results are a reflection of both the severe impact of the global financial and economic crisis and the decisive actions taken by management. The effects of the steep downturn have led not only to value adjustments of our remaining financial holdings and the impairment of goodwill at Lumileds, but also to a sharp reduction in demand, especially in Consumer Lifestyle and in our OEM businesses in Lighting, compounded by de-stocking in the whole supply chain. In response, management has given absolute priority to cash flow, where necessary at the expense of EBITA, and to the acceleration of our restructuring and change programs. We expect these programs to deliver benefits of approximately EUR 400 million on an annualized run rate, taking effect in the second half of 2009. We have sustained our spending levels on R&D and marketing as innovation is now more crucial than ever."

"The development of our quarterly results reflects the unprecedented speed and ferocity with which the economy softened in 2008. This prevents us from looking too far into the future. However, I am confident that the overall strength of our business portfolio, the proactive measures we have taken to manage the impact of the downturn and our strong focus on working capital management will carry us successfully through this economic downturn, making us stronger and well-positioned to succeed in building Philips into the leading brand in Health & Well-being," added Gerard Kleisterlee.

Business highlights

  • Philips further strengthened its position in emerging markets as it announced that it will acquire India-based Meditronics, a leading General X-Ray manufacturer. The acquisition of Meditronics is the fifth Healthcare acquisition in emerging markets in the last two years.
  • Philips added to its leadership position in Home Healthcare Solutions by acquiring the respiratory drug delivery and therapy business of Medel SpA in Italy.
  • At the annual Radiology event in Chicago in December 2008, Philips unveiled two new innovations that strengthen the position in Imaging Systems: the new 3.0T Achieva TX MRI; and the Brilliance iCT SP.
  • Philips continued to focus on enhancing the patient and care provider environment with the recent installation of Ambient Experience in the Sheik Kalifa Medical Center in Abu Dhabi.

Financial performance

  • Comparable sales growth was strong at 9% year-on-year, driven by good growth at Imaging Systems, Customer Services and Healthcare Informatics.
  • Net operating capital increased by EUR 4.0 billion compared to Q4 2007, mainly due to acquisitions.

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About Royal Philips Electronics
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a diversified Health and Well-being company, focused on improving people’s lives through timely innovations. As a world leader in healthcare, lifestyle and lighting, Philips integrates technologies and design into people-centric solutions, based on fundamental customer insights and the brand promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately 121,000 employees in more than 60 countries worldwide. With sales of EUR 26 billion in 2008, the company is a market leader in cardiac care, acute care and home healthcare, energy efficient lighting solutions and new lighting applications, as well as lifestyle products for personal well-being and pleasure with strong leadership positions in flat TV, male shaving and grooming, portable entertainment and oral healthcare. News from Philips is located at www.philips.com/newscenter.

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