Philips Achieves Strong Q3 Sales Growth Despite Lower Order Intake, Boosts FY23 Outlook

Koninklijke Philips NV PHG reported a Q3 FY23 comparable sales growth of 11% Y/Y to €4.5 billion ($4.87 billion), driven by growth across all segments and geographies.

Comparable sales for Diagnosis & Treatment businesses grew by 14%, with double-digit growth in Latin America, China, the Middle East & Turkey, and mature geographies.

The comparable sales in the Connected Care businesses increased by 10% Y/Y, led by double-digit growth in Monitoring and mid-single-digit growth in Enterprise Informatics.

The Personal Health businesses recorded a comparable sales growth of 7% Y/Y, led by high-single-digit growth in Personal Care and Oral Healthcare. 

Comparable order intake declined 9% Y/Y owing to tough comparison related to the exceptionally high levels in 2021, weak orders in China, and longer order lead times.

Philips' order book was 20% higher Y/Y before the global supply chain challenges. 

Adjusted EPS from continuing operations attributable to shareholders was €0.33 ($0.36) versus €0.24 prior year.

Adjusted EBITA margin expanded to 10.2% from 4.8% a year ago, mainly driven by increased sales, price, and productivity measures.

To date, Philips has reduced the workforce by approximately 7,500 roles out of the planned reduction of 10,000 positions by 2025.

PHG saved €258 million in the quarter through operating model productivity, procurement savings, and other productivity programs.

The company generated €489 million in operating cash flow, compared to an outflow of €(180) million in Q3 FY22.

FY23 Outlook: The company raised the outlook for comparable sales growth to 6%-7% (vs. mid-single-digit comparable sales growth earlier) and an adjusted EBITA margin to 10%-11% (vs. at the upper end of the high-single-digit range) and FCF at the upper end of the target range of € 0.7 billion-€0.9 billion. 

Also Read: Philips' Ventilator Device Recall Faces FDA's Continued Discontent Pressure

Price Action: PHG shares are trading lower by 0.11% at $18.23 premarket on the last check Monday.