Philips' First Quarter Results 2011


Philips reports first-quarter net income of EUR 138 million, EBITA of EUR 437 million and sales of EUR 5.3 billion

April 18, 2011

  • Philips and TPV to create strong television company
  • Television results reported as discontinued operations
  • Nominal sales of EUR 5.3 billion, 6% higher year-on-year
  • Comparable sales increased by 4%, with solid growth at Lighting and Healthcare
  • Comparable sales in our growth markets increased by 11%
  • EBITA of EUR 437 million at 8% of sales in the quarter
  • Net income of EUR 138 million, EUR 63 million below Q1 2010
  • Free cash outflow of EUR 615 million

 

Frans van Houten, President and CEO of Royal Philips Electronics

 

“Finding a solution for our Television business was our top priority and we strongly believe that the intended 30% / 70% joint venture with TPV that was announced today will enable a return to profitability for the Television business, and an increased portfolio focus for Philips in health and well-being. Philips has been active in the TV industry for many decades and the long-term strategic partnership with TPV shows our commitment to the continuity of Philips televisions for our consumers and trade partners.

 

The joint venture leverages the innovation and brand strength of Philips with the scale and manufacturing strength of TPV. Philips will receive a deferred purchase price and brand license income as part of the agreement. We expect certain costs in relation to the separation which will impact short-term earnings.

 

In the first quarter of 2011, Healthcare showed mid-single-digit comparable sales growth, with particular strength in Patient Care and Clinical Informatics. In the same period, Lighting returned to mid-single-digit growth, driven by LED. In Consumer Lifestyle, our growth businesses grew by double digits. Comparable sales in our growth markets increased by a solid 11%. EBITA in the first quarter improved at Healthcare, while lower earnings at Lighting and Consumer Lifestyle meant that EBITA for the company as a whole was below the same quarter of 2010. The EBITA margin declined to 8.3%. Net income in the first quarter dropped to EUR 138 million from EUR 201 million in the year-earlier quarter.

 

We expect headwinds in 2011 due to the Japan tragedy, impacting our revenue and supply chain. We have a dedicated team working to mitigate the consequences and risks.

 

It is our priority to accelerate our mid-term growth and profitability trajectory. Investments will be required to achieve this. We will provide a further update in the second half of 2011.”

 

 

Quarterly Report

 

Presentation

 

Conference call and audio webcast

A conference call with Frans van Houten, CEO, and Ron Wirahadiraksa, CFO, to discuss the results, will start at 10:00AM CET. A live audio webcast of the conference call will be available through the link below.

Q1 2011 conference call audio webcast

 

More information about Frans van Houten and Ron Wirahadiraksa

Click here for Mr. van Houten's CV and images

Click here for Mr. Wirahadiraksa's CV and images

Q1 Photo Release

CEO Frans van Houten and CFO Ron Wirahadiraksa talk to reporters in the company’s Amsterdam headquarters on April 18, 2011, when Philips announced an agreement to transfer its TV business into a joint venture with TPV as part of a long-term strategic partnership. The company also reported first-quarter results.

Philips’ Ingenia MRI system

Following the 510(k) clearance from the U.S. Food and Drug Administration, Philips’ Ingenia MRI system, which offers exceptional image clarity as it is the first-ever digital broadband MRI solution, has also become available in the U.S. market.

Dameca Acquisition

Philips expanded its presence in the anesthesia market through the acquisition of Dameca, a global provider of anesthesia machines and accessories for the operating room.

Philips LED Luminaire Licensing Program

German luminaire manufacturer Trilux has joined the Philips LED Luminaire Licensing Program. Via this licensing program Philips makes its LED systems and controls patent portfolio available to third parties with the objective to foster industry growth.

Optimum Lighting LCC acquisition

Philips has acquired Optimum Lighting LCC which has strengthened its position to deliver tailor-made turnkey solutions to renovate and upgrade existing offices, shops and buildings, providing improved lighting performance while reducing operating expenses.

Preethi Acquisition

Philips announced that it has successfully acquired the assets of the Preethi business, a leading kitchen appliances company in India. The acquisition makes Philips the clear leader in this specific fast-growing segment within the Indian Domestic Appliances market.

Sonicare AirFloss, International Dental Show

At the International Dental Show in Cologne, Germany Philips launched the Sonicare AirFloss. By using rapid bursts of air and water droplets, the innovative device provides an easier way to thoroughly clean between teeth, improving patient compliance.

2011 iF Design Awards

During the 2011 iF design awards ceremony in Hannover (Germany) in March, Philips received a record-breaking 28 iF product design awards. In addition, Philips was honored with a Gold iF design award for its Philips StyliD.

Philips Research and TUe local drug delivery development

As part of its long term research programs, Philips Research and Eindhoven University of Technology (TUe) announced an important development in MRI-guided local drug delivery for cancer treatment. The joint research team demonstrated in model studies that an improved local drug uptake in tumors has been achieved. 

For further information, please contact:

Steve Klink

Philips Corporate Communications

Tel: +31 20 597 7415

Email: steve.klink@philips.com   

 

Joost Akkermans

Corporate Communications

Tel: +31 20 5977 406

E-mail: joost.akkermans@philips.com 

 

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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 about 117,000 employees with sales and services in more than 100 countries worldwide. With sales of EUR 22.3 billion in 2010, 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 male shaving and grooming, portable entertainment and oral healthcare. News from Philips is located at www.philips.com/newscenter.

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Forward-looking statements

This document contains certain forward-looking statements with respect to the financial condition, results of operations and business of Philips and certain of the plans and objectives of Philips with respect to these items, in particular the sector sections “Miscellaneous”. Examples of forward-looking statements include statements made about our strategy, estimates of sales growth, future EBITA and future developments in our organic business. By their nature, these statements involve risk and uncertainty because they relate to future events and circumstances and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these statements.

 

These factors include but are not limited to domestic and global economic and business conditions, the successful implementation of our strategy and our ability to realize the benefits of this strategy, our ability to develop and market new products, changes in legislation, legal claims, changes in exchange and interest rates, changes in tax rates, pension costs and actuarial assumptions, raw materials and employee costs, our ability to identify and complete successful acquisitions and to integrate those acquisitions into our business, our ability to successfully exit certain businesses or restructure our operations, the rate of technological changes, political, economic and other developments in countries where Philips operates, industry consolidation and competition. As a result, Philips’ actual future results may differ materially from the plans, goals and expectations set forth in such forwardlooking statements. For a discussion of factors that could cause future results to differ from such forward-looking statements, see the Risk management chapter included in our Annual Report 2010.

 

Third-party market share data
Statements regarding market share, including those regarding Philips’ competitive position, contained in this document are based on outside sources such as research institutes, industry and dealer panels in combination with management estimates. Where information is not yet available to Philips, those statements may also be based on estimates and projections prepared by outside sources or management. Rankings are based on sales unless otherwise stated.

 

Use of non-GAAP information
In presenting and discussing the Philips Group’s financial position, operating results and cash flows, management uses certain non-GAAP financial measures. These non-GAAP financial measures should not be viewed in isolation as alternatives to the equivalent IFRS measures and should be used in conjunction with the most directly comparable IFRS measures. A reconciliation of such measures to the most directly comparable IFRS measures is contained in this document. Further information on non-GAAP measures can be found in our Annual Report 2010.

 

Use of fair-value measurements
In presenting the Philips Group’s financial position, fair values are used for the measurement of various items in accordance with the applicable accounting standards. These fair values are based on market prices, where available, and are obtained from sources that are deemed to be reliable. Readers are cautioned that these values are subject to changes over time and are only valid at the balance sheet date. When quoted prices do not exist, we estimated the fair values using appropriate valuation models, and when observable market data are not available, we used unobservable inputs. They require management to make significant assumptions with respect to future developments, which are inherently uncertain and may therefore deviate from actual developments. Critical assumptions used are disclosed in our 2010 financial statements. Independent valuations may have been obtained to support management’s determination of fair values. All amounts in millions of euros unless otherwise stated; data included are unaudited. Financial reporting is in accordance with IFRS, unless otherwise stated. This document comprises regulated information within the meaning of the Dutch Financial Markets Supervision Act ‘Wet op het Financieel Toezicht’.

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