(ABM FN-Dow Jones) Philips has posted a loss of almost 1 billion euros in the first quarter of 2024 after reaching a settlement in the US for problems with its sleep apnea devices. Philips does appear to be on track to achieve its own outlook for 2024, which was repeated today. This emerged from figures from the group on Monday morning.
“We started the year in line with our 2024 improvement plan, with positive order intake growth outside China and strong margin improvement. Supported by key innovations and a strong focus on our execution priorities, we remain confident in our 2024 performance improvement plan” CEO Roy Jakobs said in an explanation.
On Monday, Philips announced a settlement regarding personal injury and medical monitoring in the US. Philips Respironics agreed to pay a total of $1.1 billion, the company said.
Philips also entered into an agreement with insurers to pay 540 million euros to cover product liability claims related to the Respironics recall, the company further announced on Monday.
These revenues are expected to be recognized in the second quarter of 2024, with payment expected during 2024, Philips said.
“The related payments are expected in 2025 and will be financed from Philips’ cash flow generation. As a result, a provision of [omgerekend] 982 million euros affected,” the company said.
Earlier this month, Philips was able to report that the American judge had approved the deal that the company concluded with the American Food and Drug Administration. This related to the consent decree, which mainly focuses on the business activities of Philips Respironics in the US.
“Now that this agreement has been approved […] we have a clear roadmap to gradually restore operations and serve patients around the world,” Jakobs said in a statement at the time.
First quarter figures
In the past quarter, Philips achieved a turnover of 4.14 billion euros, compared to 4.17 billion euros in the same period a year earlier. The analyst consensus expected 4.15 billion euros.
The Diagnosis & Treatment division contributed the most to turnover with more than 2.0 billion euros. On an annual basis, this was an increase of 1.0 percent. The market also expected 2.0 billion euros.
At Connected Care, revenues were 5.0 percent lower on an annual basis at 1.16 billion euros, while analysts had expected 1.22 billion euros. Turnover at Personal Health amounted to 790 million euros. That was 1.0 percent less on an annual basis. The consensus predicted 798 million euros.
On a comparable basis, Philips’ turnover increased by 2.4 percent last quarter, while analysts also expected growth of 2.4 percent.
The comparable sales increase of 3.0 percent for Diagnosis & Treatment, a decline of 1.0 percent at Connected Care and another increase of 3.0 percent at Personal Health, gave a mixed picture compared to a growth of 2.3. 2.2 and 3.8 percent for these divisions, which the market expected.
Adjusted EBITA in the first quarter amounted to 388 million euros, compared to 350 million euros a year earlier and above the expectation of 361 million euros that analysts had expected in advance.
The corresponding margin improved from 8.6 to 9.4 percent, where the market predicted 8.7 percent.
Bottom line, a loss of 998 million euros remained in the past quarter, due to the American deal, where analysts had estimated the net profit at 64 million euros. Last year, Philips recorded a loss of 665 million euros in the first quarter.
Outlook
For the whole of 2024, the analyst consensus predicts a turnover of 18.60 billion euros, which represents an increase on a comparable basis of 4.0 percent. Philips itself indicated on Monday that it was still counting on growth of 3 to 5 percent.
The adjusted EBITA amounts to 2.15 billion euros with a margin of 11.5 percent, the consensus expects. This was 1.92 billion euros in 2023 with a margin of 10.6 percent.
Philips is still targeting an adjusted EBITA margin of 11 to 11.5 percent in 2024.
Bottom line, this probably leaves a profit of 659 million euros, analysts think, against a loss of 463 million in 2023.
Philips closed 2.5 percent higher on Friday at 19.75 euros.
Update: to clarify the difference between settlement and consent decree
Source: ABM Financial News
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