4/25/2016, 10:17 AM (Source: TeleTrader)
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Philips reports lower profits, mulls LED lighting unit IPO

Konenlijk Philips N.V. reported first quarter sales growth of €5.5 billion, up 3% from €5.33 billion in the same quarter last year. Nominally, the rise was 14% when expressed in adjusted earnings before interest, tax and amortization (EBITA), and reached €374 million, versus €327 million a year ago. The profits make up 6.8% of sales, up from 6.1% in the same quarter a year ago.

The Dutch electronics giant recorded financial expenses at €114 million. The net income reached only €37 million, which translates to earnings per diluted share of €0.03. This is far lower from last year's net profits of €100 million and was "mainly impacted by tax charges related to the separation," according to company's press release.

"Philips’ first-quarter 2016 results reflect solid comparable sales growth across our HealthTech businesses and our LED Lighting business, bolstered by the successful launch of several new products," said Frans van Houten, Philips chief executive officer.

The LED Lighting business grew very strongly, "by 27% and now account for 50% of overall Lighting sales," stated Philips, but the 125-year old business arm is likely to be sold. The Amsterdam-headquartered corporation is still trying to decide whether if it should accept offers from several companies for private sale or to offer its LED division via the initial public offering (IPO). The lighting division could be valued as much as €5 billion and the decision will follow "shortly", i.e. in the beginning of the second quarter.

"With equity markets' sentiment improving compared with the first couple of months of the year, an IPO increasingly appears a more likely outcome," said the Philips statement.

Philips has seen healthy growth of 5% in its HealthTech division, and considers this field with products "such as wearable patient monitoring solutions, digital pathology and health informatics," as a faster growing and more profitable.

"Our outlook for 2016 remains unchanged, as we continue to expect earnings improvements in the year to be back-end loaded, taking into account ongoing macro-economic headwinds and the phasing of costs and sales," the CEO said giving an outlook for the rest of the year.

The company's stock has seen a fall in value of almost 12%, but recovered over 2% year-to-date. Shares at the European stock markets traded down 3.94% at €24.16 by 10:00 a.m. CET.

Philips shares at NYSE last closed down 0.21% at $28.28 on Friday.


Image: Philips stand at IFA (EPA / Wolfgang Kumm)

Breaking the News / ZR