Q1 2017 results
Message from the CEO
“We had a solid start to the year, with 2% Group comparable sales growth and a 90-basis-point improvement in the Adjusted EBITA margin. Despite continued volatility in the markets in which we operate, our HealthTech portfolio grew 3% and achieved further operational improvements, resulting in an 80-basis-point increase in the Adjusted EBITA margin.
Our Diagnosis & Treatment businesses and our Personal Health businesses delivered strong margin improvements, while our Connected Care & Health Informatics businesses reflected the unevenness of sales from large hospital informatics deals. Comparable order intake growth was 2%, driven by mid-single-digit growth in the Diagnosis & Treatment businesses.
During what was a very active quarter, in line with our strategic plan we decreased our shareholding in Philips Lighting to 55%. We continued to strengthen our position as a leader in health technology by launching several breakthrough innovations, forging strategic partnerships and winning various integrated solutions deals. The recent STOXX Europe 600 Index reclassification of Philips’ shares to ‘Health Care’ from ‘Industrial Goods & Services’ acknowledges our transformation into a health technology company.
As we execute our strategy, we will further improve our underlying performance and target to deliver 4-6% comparable sales growth and an improvement in Adjusted EBITA margin of around 100 basis points per year. Our outlook for 2017 remains unchanged as we expect further operational improvements and comparable sales growth in the year to be back-end loaded.”
Frans van Houten, Chief Executive OfficerOur Q1 2017 performance at a glance
Q1 2016 | Q1 2017 | |
Sales | 5,517 | 5,724 |
Nominal sales growth | 3% | 4% |
Comparable sales growth | 3% | 2% |
Income from operations (EBIT) | 199 | 348 |
as a % of sales | 3.6% | 6.1% |
EBITA | 290 | 437 |
as a % of sales | 5.3% | 7.6% |
Adjusted EBITA | 374 | 442 |
as a % of sales | 6.8% | 7.7% |
Financial expenses, net | (114) | (61) |
Investments in associates | 3 | (1) |
Income taxes | (75) | (91) |
Income from continuing operations | 13 | 195 |
Discontinued operations | 24 | 64 |
Net income | 37 | 259 |
Net income attributable to shareholders per common share (in EUR) - diluted | 0.03 | 0.25 |
1)Non-GAAP financial measure. Refer to Reconciliation of non-GAAP information.
- Sales increased to EUR 5.7 billion, with comparable sales growth of 3% in the HealthTech portfolio and 2% for the Group
- Net income amounted to EUR 259 million, compared to EUR 37 million in Q1 2016
- Income from operations (EBIT) amounted to EUR 348 million, compared to EUR 199 million in Q1 2016
- EBITA improved to EUR 437 million, or 7.6% of sales, compared to EUR 290 million, or 5.3% of sales, in Q1 2016
- Adjusted EBITA improved to EUR 442 million, or 7.7% of sales, compared to EUR 374 million, or 6.8% of sales, in Q1 2016
- Operating cash flow totaled EUR 343 million, compared to EUR 10 million in Q1 2016; free cash flow of EUR 295 million, compared to an outflow of EUR 177 million in Q1 2016
Highlights of Q1
Philips Azurion
Philips reinforced its leadership in image-guided therapy solutions with the global launch of Philips Azurion, the next-generation image-guided therapy platform that enables clinicians to perform a wide range of routine and complex procedures, helping them to optimize interventional lab performance and provide superior care.
Highlights of Q1
iFR technology
Philips Volcano continued its strong performance as the business reached an important milestone with the results of two large clinical trials demonstrating the benefits of Philips’ Instant Wave-Free Ratio (iFR) technology compared to Fractional Flow Reserve (FFR), the current standard, removing a critical barrier for the use and adoption of iFR to decide, guide and confirm appropriate therapies.
Highlights of Q1
Xperius
B. Braun and Philips entered into a strategic alliance to innovate and accelerate growth in ultrasound-guided regional anesthesia and vascular access. The alliance launched Xperius, a new co-branded mobile ultrasound system specifically designed as the platform to support current and future integrated solutions in this fast-growing market.
Highlights of Q1
Australian Pharmacy Sleep Services
Building on its strategy to deliver relevant solutions and business models, Philips signed an agreement to acquire Australian Pharmacy Sleep Services (APSS), a pioneer in pharmacy sleep testing. APSS will complement Philips’ sleep and respiratory care portfolio and will help to accelerate the business’s home sleep testing offering through the pharmacy channel in Australia.
Highlights of Q1
Philips Sonicare
At the International Dental Show in Germany, the world’s leading trade fair for the dental sector, Philips revealed the Philips Sonicare DiamondClean Smart toothbrush and Philips Sonicare Breath care system with breath analyzer, an all-in-one connected oral care platform. Philips also presented the results of a new clinical study demonstrating the effectiveness of Philips Sonicare power toothbrushes and Philips AirFloss Ultra.
Highlights of Q1
Telehealth
Demonstrating the success of telehealth technologies, Emory Healthcare (US) achieved savings of USD 4.6 million over a period of 15 months by using Philips’ eICU platform. Similarly, with the help of Philips’ Intensive Ambulatory Care program, Banner Health (US) reduced hospitalizations for chronically ill patients with multiple conditions by nearly 50%, reducing overall cost of care by more than one third.
Highlights of Q1
Philips IntelliSpace Enterprise Edition
Expanding its health informatics portfolio, Philips launched its IntelliSpace Enterprise Edition, an industry-first managed service solution for hospital-wide clinical informatics and data management. The high-performance, secure and scalable health informatics platform enables health systems to manage the growth and cost of their clinical enterprise with a pay-per-use model.
Highlights of Q1
Philips ElastQ
Further strengthening its portfolio of imaging solutions, Philips received FDA 510(k) clearance for its ElastQ ultrasound imaging technology for non-invasive assessment of liver conditions. Philips also launched Access CT, a new CT system designed for healthcare organizations seeking to establish or enhance CT imaging capabilities at affordable cost.