Philips’ net profit jumps to £307 million in the fiscal third quarter

Written by: Wajeeh Khan
October 19, 2020
  • Philips’ net profit jumps to £307 million in the fiscal third quarter.
  • The Dutch company reports £4.50 billion of quarterly sales.
  • Philips forecasts modest growth in comparable sales in fiscal 2020.

Philips N.V. (AMS: PHIA) said its net profit in the fiscal third quarter posted significant growth and topped experts’ forecast on Monday. For the next four years (2021-2025), the company is now targeting higher profitability and accelerated sales growth.  

Shares of the company opened about 4% up on Monday but dropped 2% in the next hours. At £38.59 per share, Philips is now 2.5% down year to date in the stock market after recovering from a low of £26.72 per share in March when the impact of COVID-19 was at its peak. Confused about choosing a reliable stockbroker to trade online? Here’s a list of the top few to make selection easier for you.

Philips reports £4.50 billion of quarterly sales

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Philips reported £307.30 million of net profit in the fiscal third quarter. In the same quarter last year, its net profit was capped at a much lower £188 million. Experts had forecast the medical-technology company to print £247.65 million of net profit in the recent quarter. In the prior quarter (Q2), Philips had posted a 15% decline in the fiscal second quarter.

In terms of sales, the Dutch multinational recorded £4.50 billion versus the year-ago figure of £4.25 billion. Comparable sales saw a 10% growth in the third quarter. In comparison, analysts had estimated £4.36 billion of quarterly sales for Philips. In late September, Philips sold its Suffolk factory to Malaysia’s Guan Chong Berhad.

At the time of writing, Philips is valued at £35 billion and has a price to earnings ratio of 39.11.

Philips’ guidance for the full fiscal 2020

Its adjusted Ebita (earnings before interest, taxes, and amortisation) margin stood at 15.4% in the recent quarter. Philips acknowledged the uncertainty attributed to the ongoing Coronavirus pandemic on Monday but reaffirmed its full-year guidance of unchanged adjusted Ebita, and modest growth in comparable sales.

The COVID-19 crisis has so far infected more than 40 million people worldwide and caused over 1.1 million deaths.

For the next four years (2021-2025), Philips said it now wishes its average annual growth in comparable sales to fall in the range of a higher 5% to 6%.  It is targeting 60 to 80 basis points of annual increase in adjusted Ebita margin on average for the four years. Free cash flow, the Amsterdam-based company said will jump to over £1.81 billion by 2025.