Philips' Second Quarter and Semi-Anual Results 2009 - Healthcare Sector

Royal Philips ElectronicsBusiness highlights
  • Philips acquired Traxtal, a medical technology innovator in image-guided procedures, to strengthen its position as a leading provider of minimally invasive therapy solutions.
  • Philips introduced a major advancement for cardiac ultrasound imaging of newborn babies and infants with the launch of the micro TEE, the world's smallest transesophageal echocardiography (TEE) transducer.
  • Philips expanded its portfolio with three new ventilator solutions designed to support breathing in the intensive care,sub-acute and home care settings.
  • Philips secured a multi-million euro, multi-modality and service deal with Kyushu University Hospital. The hospital, Japan's leading radiology and molecular imaging center, is now equipped with Philips imaging, patient monitoring and cardiac care systems.

Financial performance

  • Currency-comparable equipment order intake declined 9% year-on-year. A decrease in Nord American orders, broadly in line with that of Q1 2009, was partly offset by solid growth in other, particularly emerging, markets. Along the business axis, declines were mainly seen at Imaging Systems and Clinical Care Systems.
  • Comparable sales declined 5% year-on-year, with softness in mature markets, particularly North America, being partly offset by growth in emerging markets. Growth at Customer Services was more than offset by lower sales at Clinical Care Systems, Healthcare Informatics (mainly Patient Monitoring) and Imaging Systems. Sales at Home Healthcare solutions showed a minor decline.
  • EBITA declined EUR 30 million compared to Q2 2008, mainly due to lower volume, price and currency effects, partly offset by cost savings.
  • EBITA included restructuring and acquisition-related charges of EUR 24 million. Excluding these charges, the EBITA margin of 9.7% has improved compared to an equivalent EBITA profitability of 5.2% in Q1 2009.
  • Net operating capital increased by EUR 448 million compared to Q2 2008, mainly due to US dollar currency effects.
  • Order intake at Healthcare declined 13% compared to the first half of 2008, largely impacted by the continued economic downturn in North America, notably for Imaging Systems.
  • Sales at Healthcare grew 10% in nominal terms. Excluding currency effects and portfolio changes, comparable sales at Healthcare showed a 3% decrease year-on-year, with declines across most businesses partially offset by solid growth at Customer Services and Home Healthcare Solutions; sales continued to grow in emerging markets.

Gerard Kleisterlee, President and CEO of Royal Philips Electronics, reported: "In line with earlier guidance, we did not see a material improvement in consumer or professional markets in the past three months. However, while the pressure on our top line persisted, we are reporting a positive net income and improved underlying profitability over the quarter.

We remain cautious about the overall economy and the markets we’re operating in and will not shy away from implementing further cost measures where needed. We do, however, expect our comparative performance to be better in the second half of 2009 than in the first half of the year as our cost-saving programs have an increasing impact on our earnings. On the same basis, there could be some early sequential improvement in comparable sales as well.

We will continue to do everything necessary to come out of this recession as a stronger, more agile company and a leader in our field."

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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 116,000 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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