Philips sheds light on accounts, heals profit margin
THE HAGUE: Dutch electronics giant Philips, which is focusing its business on medical equipment and services, said on Monday that its profit margin and net earnings both rose in the third quarter as it cut costs and stepped up sales.
Net profit jumped 10 per cent to 423 million euros ($498 million) for the period from July through September.
Meanwhile sales climbed by four per cent from the previous quarter to 4.1 billion euros, while orders rose by five per cent.
“Despite ongoing global uncertainties, our outlook for 2017 remains unchanged,” said chief executive Frans van Houten in a statement, adding that “we are on track to deliver four-six per cent comparable sales growth and an improvement” by one per cent in its measure of operating profit margin. Last year the firm measured its operating profit at 10.5 per cent of sales. In the third quarter it came in at 12.8 per cent. It also said it was on track to deliver annual cost savings of 400 million euros.
The Amsterdam-based firm may probably best known for its consumer electronics and lighting businesses, but Philips has in recent years pivoted towards healthcare.
Although it had sold light bulbs almost since it was founded in 1891, Philips last year spun off the lighting unit.
As it no longer owns a majority and will likely soon lose control of the unit it has now moved it into discontinued operations in its accounts, meaning it is no longer included in measures of sales and operating profit growth.
The refocus of the business on medical equipment was prompted largely by rising competition from Asia in the consumer and lighting segments.
Philips said that growth momentum continued in China in the third quarter, noting double-digit growth in its diagnostic imaging order intake.