- Group comparable sales growth flat, with sales in growth geographies up 5%
- Healthcare comparable equipment order intake up 1%
- Currency negatively impacted sales by 5% and EBITA by 1.8 percentage points of sales
- EBITA of EUR 314 million, compared to EUR 402 million in Q1 2013
- EBITA excluding restructuring and acquisition-related charges amounted to EUR 368
million, or 7.3% of sales, compared to 8.0% in Q1 2013
- Net income of EUR 137 million, compared to EUR 162 million in Q1 2013
- Free cash outflow of EUR 72 million, excluding a EUR 273 million pension contribution
related to the de-risking of the Dutch pension plan
- Inventories improved by 0.6 percentage points to 14.9% of sales
- Company reiterates commitment to 2016 financial targets
Frans van Houten, CEO:
"Our first-quarter financial results reflect a challenging start to the year. Significant currency impact, market headwinds in, among others, China and Russia, and the business impact of the voluntary suspension at our healthcare production facility in Cleveland resulted in flat comparable sales growth and a decline in EBITA as a percentage of sales of 130 basis points. We recorded a lower level of profitability at Healthcare, whereas Lighting and Consumer Lifestyle continued to deliver a year-on-year operational margin improvement.
At Lighting, LED-based sales grew by 37%, and we are encouraged by the positive reception given by our customers to our broad range of new connected lighting solutions demonstrated at the Light + Building trade fair in Germany. Consumer Lifestyle grew 7%, with a particularly strong performance at Floor Care and Air Purifiers. At Healthcare, we see encouraging developments in our order book and increasing opportunities for multi-year deals.
Our multi-year transformation program Accelerate! continues to show strong traction, driven by a solid innovation pipeline, investments in future growth and a company-wide focus on improved operational and financial performance. We are also taking comprehensive measures to raise the efficacy of our quality management system to Philips Excellence standards in close collaboration with industry experts. Our overhead cost reduction program and our Design for Excellence program are on track, thus helping to partly offset the negative currency impact.
Looking ahead, 2014 will be a challenging year, but we remain very confident of achieving our 2016 mid-term financial targets."
Q1 financials overview:
Healthcare comparable sales showed a 2% decline year-on-year. Home Healthcare Solutions posted mid-single-digit growth, while Customer Services and Patient Care & Clinical Informatics achieved low-single-digit growth. Imaging Systems recorded a double-digit decline. In growth geographies, comparable sales showed a mid-singledigit decline. Currency-comparable equipment order intake increased by 1% year-on-year, with Patient Care & Clinical Informatics recording double-digit growth, while Imaging Systems posted a mid-single-digit decline. EBITA margin excluding restructuring and acquisition-related charges declined to 8.8%, a decrease of 1.7 percentage points year-on-year.
Consumer Lifestyle comparable sales increased by 7%, with high-single-digit growth at Domestic Appliances and mid-single-digit growth at Health & Wellness and Personal Care. In growth geographies, comparable sales showed a double-digit increase, while mature geographies achieved low-single-digit growth. EBITA margin excluding restructuring and acquisition-related charges increased to 10.6%, a year-on-year improvement of 0.7 percentage points.
Lighting comparable sales were flat year-on-year. Lumileds and Automotive achieved double-digit growth, while Light Sources & Electronics and Professional Lighting Solutions posted a low-single-digit decline and Consumer Luminaires recorded a high-single-digit decline. LED-based sales grew by 37% compared to Q1 2013 and now represent 33% of total Lighting sales. In growth geographies, comparable sales (excluding OEM Lumileds showed a low-single-digit increase. EBITA margin excluding restructuring and acquisition-related charges was 9.0%, a yearon- year improvement of 0.6 percentage points.
As of the end of March, Philips had completed 14% of the EUR 1.5 billion share buy-back program.
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.
More information about Frans van Houten and Ron Wirahadiraksa
Click here for Mr. van Houten's CV and images