Philips upbeat despite drop in Q2 profit

THE HAGUE: Dutch electronics giant Royal Philips NV said yesterday that its net profit fell in the second quarter due to the coronavirus outbreak, but foresaw a return to growth this year on the back of burgeoning health equipment sales.

Soaring demand for equipment, including ventilators used to treat the pandemic, had boosted the order book for the firm, which recently abandoned its home appliance arm to focus on the health sector.

Amsterdam-based Philips said net profit in the second quarter sank 14.63% year on year to €210 million ($240 million), compared to €246 million for the same period in 2019.

Sales dropped 6% for the same period to €4.4 billion.

“As anticipated, Covid-19 caused a steep decrease in consumer demand,” Phliips chief executive Frans van Houten said in a statement.

The decrease in normal, nonvirus hospital procedures involving Philips equipment had a particular impact, he said.

However demand for equipment used to treat COVID-19 had caused orders to grow by 27%, van Houten added.

“We have tripled our production of ventilators, doubled our production of patient monitors, and there is big demand for CT imaging systems and X-ray equipment,” he added in a phone call with AFP.

Philips was now targeting an improvement for the rest of the year despite the impact of the pandemic.

“We feel we can get back to growth in the second half of the year, and then even for the whole year have positive growth,” van Houten said.

Philips started off as a lighting company more than 100 years ago but has undergone major changes in recent years.

It first divested its lighting division before announcing in January it was selling off its home appliance arm to fully concentrate on health sector products.

Van Houten said the firm was still confident in this plan, due to health being a “higher margin” business, and increased need resulting from the pandemic for services such as tele-health care which Philips had focused on.