Are Things Starting to Turn Around for Philips?
For the most part, the story of Philips has been consistent since 2021 and unfortunately, the narrative has been one of recalls and massive dips in shares. However, that story changed a bit today, when the Amsterdam-based company raised its 2023 outlook after beating consensus in the second quarter.
Sales in 2Q23 jumped to $4.97 billion compared with $4.6 billion for the same period last year. Adjusted EBITA increased to $501.7 million, or 10.1% of sales, compared to $239.2 million, or 5.2% of sales, in Q2 2022.
Philips said improved performance in the first half of the year, solid order book, and the ongoing actions to improve execution, gives it enough footing to expect to deliver mid-single-digit comparable sales growth and an Adjusted EBITA margin at the upper end of the high-single-digit range for the full year 2023.
“We delivered 9% comparable sales growth, increased profitability, and improved cash flow, against a backdrop of ongoing macroeconomic and geopolitical challenges,” Roy Jakobs, Philips CEO, said in a release.
However, the spots weren’t all bright in Philips’s earnings report. The company said its order intake had decreased by 8% in the April-June period, which caused shares to drop by about 5%.
The story of Philips recalls began in 2021 and added a new layer in June when the company had a Class I voluntary recall for the Trilogy Evo ventilator.
During an earnings call, Jakobs gave a brief update on some of the recalls.
“Resolving the Respironics recall for patients remains our highest priority,” Jakobs said according to a Seeking Alpha transcript of the earnings call. “And looking ahead, based on our strong performance in the first half of the year, our order book and the ongoing actions to improve execution, we have raised outlook for the full year 2023, acknowledging that uncertainties remain.”