Philips Q3 profit misses; sales, margins rise – Reuters

(Corrects percentage rise in paragraph 1, comparative figure in paragraph 4)

By Toby Sterling

AMSTERDAM Oct 24 Dutch healthcare technology and services company Philips reported a 14 percent jump in third-quarter earnings as sales and margins rose, but narrowly missed analysts’ estimates.

Chief Executive Frans Van Houten said the company expected further earnings improvements in the fourth quarter.

However “we remain concerned about risk due to volatility in the markets in which we operate,” he added.

The company’s adjusted earnings before interest, taxes and amortisation (EBITA) grew to 649 million euros ($ 705 million) from 570 million euros in the same period a year ago.

Analysts polled for Reuters were expecting adjusted EBITA of 651 million euros.

Comparable sales rose 2 percent to 5.90 billion euros. Van Houten said sales at the company’s core “HeathTech” portfolio were up 5 percent, with order intake up 8 percent.

Group sales were dragged lower by the results of Philips Lighting, which Philips continues to own after its May spinoff.

Philips shed the division to reinvent itself as a healthcare company, and to allow Lighting to pursue growth and acquisitions separately.

Philips now operates with three main divisions: personal health products, which include sleep masks as well as toothbrushes and shavers; diagnostic products, including high-end medical scanners and equipment; and “connected care”, a business-to-business division that collaborates with hospitals to offer software and services on a large scale to help improve their performance.

Philips improved margins at the first two divisions, reporting group adjusted EBITA of 11 percent of sales, up from 9.8 percent a year ago.

However the connected care division saw margins shrink, with sales of patient-monitoring systems falling, mostly due to a “double digit decline in Western Europe” in the category, the company said.

Analysts had been sceptical that the company could reach 11 percent adjusted margin, its full-year target, this quarter. Philips has said that in the medium term, the figure should continue improving to the mid-teens.

($ 1 = 0.9205 euros) (Reporting by Toby Sterling; Editing by Kenneth Maxwell and Amrutha Gayathri)