Trading On margin

Koninklijke Philips Electronics, NV (NYSE: PHG) – Philips stock falling after third quarter results, expects supply chain volatility to continue into fourth quarter


  • Koninklijke Philips NV (NYSE: PHG) reported a 5.8% year-on-year decline in third-quarter sales to 4.16 billion euros, and comparable sales decline of 7.6% due to headwinds caused by the challenges of the global supply chain and the consequences of sleep and respiratory care recall.
  • For the quarter, comparable order intake increased 47%. The Connected Care and Diagnostic & Treatment businesses recorded comparable double-digit order intake growth.
  • Profit from continuing operations increased 58.4% year-on-year to 442 million euros and the margin increased 430 basis points to 10.6%.
  • Gross margin increased 250 basis points to 47.5%. Adjusted EBITDA decreased 25.2% year-on-year to 512 million euros and the margin contracted 320 basis points to 12.3%.
  • Adjusted EPS decreased to € 0.40 from € 0.50 in 3Q20.
  • Revenue from Diagnostic & Treatment activities amounted to 2.15 billion euros (+ 9.3% year-on-year) with comparable sales growth of 10%. The connected care activities have a turnover of 1.04 billion euros (-32.9% yoy), the personal health activities have a turnover of 803 million euros (-0 , 3% yoy).
  • Philips generated operating cash flow of 256 million euros, compared to 575 million euros in 3Q20. Free cash flow amounted to 45 million euros compared to 359 million euros a year ago.
  • The company completed the sale of its Home Appliances business, which resulted in a gain of € 2.5 billion after tax and transaction costs.
  • The company’s cash and cash equivalents amounted to € 3.83 billion as of September 30, 2021.
  • Philips continues to see uncertainty related to COVID-19 and expects supply chain volatility to continue into the fourth quarter.
  • Outlook FY21: Philips expects sub-single-digit comparable sales growth with modest improvement in FY21 Adjusted EBITA margin and expects to resume growth and margin expansion trajectory in 2022.
  • Price action: Shares of PHG are trading down 1.73% at $ 43.80 in the pre-market session on Monday.


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