Philips (PHG) reported revenues of €5,677 million ($7,853 million) for the first quarter of 2010, an increase of 12% compared to the corresponding prior-year period. Earnings per share were €0.22 (30 cents). Healthcare sales increased by 7% and were helped by robust performance at Customer Services and Clinical Care Systems. Consumer Lifestyle sales grew by 11% and was due to overall growth of the product portfolio, notably Television, Health & Wellness and Licenses.
Lighting grew 18% on a comparable basis with double-digit growth at most businesses, notably Lumileds, Automotive and Lamps. Professional Luminaires continued to decline while Consumer Luminaires posted a modest growth.
Sales grew by 8% in mature markets while it grew by 22% in emerging markets. The Western European increase was driven by Lighting and Healthcare. The emerging markets reported strong double-digit growth, led by China and India, primarily driven by lighting.
Earnings before Interest, Tax and Amortization (EBITA) increased by €578 million compared to 1Q09. This was due to profitability improvements in all three operating sectors and lower costs in Group Management and Services.
There was a net operating cash inflow of €28 million. The Cash balance was maintained at €4.4 billion as free cash outflow of €151 million was more than offset by €98 million of proceeds from TPV share sale and an increase in debt by €59 million.
Inventories as a percentage of sales were 30 basis points higher than in 1Q09 despite a €0.2 billion year –over –year value reduction. Inventories as a percentage of sales increased by 1.3 percentage points compared to the previous quarter. Inventory increased across sectors to €3.3 billion at the end of 1Q10.
At the end of the quarter, Philips had a net debt of €74 million ($102.3 million) which is a substantial improvement from the year-ago period.
The number of employees increased by 262 in 1Q10 due to increases at Healthcare, Consumer Lifestyle and GM&S, partly offset by a decline at Lighting.
The restructuring of its product portfolio to better position itself as a more-focused company in the healthcare, lighting and lifestyle markets is in progress with several focused acquisitions and divestments in the most recent quarter. This bodes well for the company going forward.
Earlier, Philips announced that it has acquired the assets of InnerCool Therapies Inc., a pioneer in the field of therapeutic hypothermia, which involves the management of a patient’s body temperature.
Headquartered in Amsterdam, The Netherlands, Koninklijke Philips Electronics N.V. is one of the world’s largest electronics companies and the biggest in Europe, with sales of €26.4 billion in 2008 and €23.2 billion in the full year 2009.
We currently have a Neutral recommendation on PHG.
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