Philips’ success in emerging markets held back by subdued sales in Europe and US
Dutch health tech firm Philips shares rose 1.2 per cent this morning despite missing analyst expectations on sales growth in its first-quarter results.
The firm, which has shed consumer electronics and lighting divisions in recent years to streamline as a health specialist, was hit by falling demand for hospital equipment in Europe and flat US sales.
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The figures
Despite disappointing sales, Philips’ earnings rose six per cent year on year in the first three months of 2018, to €364m (£314m). But sales grew just two per cent despite upbeat numbers in China and other emerging markets, missing analyst expectations of a 2.4 per cent increase.
Operating cash flow was €14m, compared to €92m in the first quarter last year, while free cash outflow was €206m, up from €47m.
Why it’s interesting
Despite seeing success in its emerging markets such as China, in which sales rose 10 per cent, Philips’ core European and US markets struggled decreasing one per cent overall, capping overall comparable sales growth at two per cent.
The Dutch-listed firm has pivoted in recent years from consumer products to being a health technology firm, selling off Philips Lighting in 2016.
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What Philips said
Chief executive Frans van Houten said: “I am encouraged that the measures taken in the personal health businesses resulted in regained momentum and a step-up of sales growth, which was led by the high-teens comparable sales growth in the oral healthcare business.
“Moreover, I am pleased with the double-digit comparable sales and order intake growth for the group in the growth geographies.”