• Koninklijke Philips NV (NYSE:PHG) reported third-quarter sales declined by 5.8% year-over-year to €4.16 billion, and a 7.6% comparable sales decline due to headwinds caused by global supply chain challenges and Sleep & Respiratory Care recall consequences.
• For the quarter, Comparable order intake increased by 47%. The Connected Care businesses and Diagnosis & Treatment businesses recorded double-digit comparable order intake growth.
• Income from continuing operations increased by 58.4% Y/Y to €442 million, and margin expanded by 430 bps to 10.6%.
• The gross margin expanded by 250 bps to 47.5%. Adjusted EBITDA decreased by 25.2% Y/Y to €512 million, and margin contracted by 320 bps to 12.3%.
• Adjusted EPS decreased to €0.40 compared to €0.50 in 3Q20.
• Diagnosis & Treatment businesses sales were €2.15 billion (+9.3% Y/Y) with Comparable sales growth of 10%. Connected Care businesses sales €1.04 billion (-32.9% Y/Y), Personal Health businesses sales €803 million (-0.3% Y/Y).
• Philips generated an operating cash flow of €256 million, compared to €575 million in 3Q20. The free cash flow was €45 million versus €359 million a year ago.
• The company completed the divestment of its Domestic Appliances business, resulting in a €2.5 billion gain after tax and transaction-related costs.
• The company’s cash and cash equivalents stood at €3.83 billion as of September 30, 2021.
• Philips continues to see uncertainty related to COVID-19 and expects supply chain volatility to continue in Q4.
• FY21 Outlook: Philips expects to deliver low-single-digit comparable sales growth with a modest Adjusted EBITA margin improvement for FY21 and expects to resume growth and margin expansion trajectory in 2022.
• Price Action: PHG shares are trading lower by 1.73% at $43.80 during the pre-market session on Monday.