Philips’ net profit tanks about 15% in the fiscal second quarter

Philips NV (AMS: PHIA) said that its net profit came in stronger than expected in the second quarter on Monday but saw a significant decline on a year over year basis. The company, however, expressed confidence that profitability is likely to improve in the upcoming months and that it will recover back to sales growth in the remaining two quarters of the financial year. Philips inked a long-term strategic agreement with Flevo Hospital last week.

Shares of the company opened about 1.5% up on Monday and jumped another 4% on market open. At £41.63 per share, Philips is currently a little under 5% up year to date in the stock market after recovering from a low of £26.77 per share in March when the impact of COVID-19 was at its peak. Learn more about why prices rise and fall in the stock market.

Philips reports £188.09 million of profit in Q2

Formerly known as the world’s largest electronics company, Philips now focuses primarily on health technology. Owing to the Coronavirus pandemic, the company said that consumer demand remained low in recent months due to the delay in elective procedures. Hospitals also resorted to postponing installations that further weighed on Philips’ personal health, diagnosis, and treatment segments.

The Dutch multinational conglomerate, however, is still committed to modest growth in comparable sales and adjusted EBITA. At £188.09 million, Philips’ net profit in the second quarter came in significantly lower than £220.10 million in the same quarter last year. Experts, on the other hand, had forecast the company to print a much lower £83.33 million of profit in Q2.

In terms of sales, the company registered a decline from £4.23 billion in the comparable quarter of last year to £3.99 billion in the recent quarter. Its revenue, however, was also stronger than the analysts’ expectations of £3.94 billion in Q2.

Philips sees a 6% decline in comparable sales in Q2

Experts were also anticipating the company to see a 7.1% decline in comparable sales versus a much lower 6% decline that Philips recorded on Monday.

Other prominent figures in Philips’ earnings report for the second quarter included a 27% annualised increase in comparable order intake, and a contraction in adjusted Ebita margin from 11.8% last year to 9.5% in Q2.

At the time of writing, the Amsterdam-based medical technology company has a market cap of £37.89 billion and a price to earnings ratio of 40.91.