Philips Drops 2020 Outlook as Coronavirus Hits First-Quarter Earnings

Dutch health technology company Philips on Monday dropped its outlook for the rest of the year, as the global coronavirus outbreak took a large bite out of its first-quarter earnings while the second quarter was set to be even worse. Philips said earnings before interest, taxes and amortisation (EBITA) dropped 33 percent from a year earlier in the first quarter to EUR 244 million (roughly Rs. 2,032 crores), while comparable sales declined 2 percent to EUR 4.15 billion (roughly Rs. 34,557 crores).

The novel coronavirus disease COVID-19 has increased global demand for Philips' ventilators, scanners and other hospital equipment.

But that has been more than offset by a steep decline in demand for personal health products, such as toothbrushes and shavers, as lockdowns spread from China through Asia to Europe and the United States - gradually increasing the impact of the pandemic throughout the first quarter.

"On that basis, we expect that all our geographies will be impacted throughout the second quarter," Chief Executive Frans van Houten said.

"This is expected to result in a steep revenue decline for our Personal Health businesses and a sizable high-single-digit decline for our Diagnosis and Treatment businesses."

Van Houten said Philips was now aiming to return to growth in the second half of the year, which could lead to a "modest" comparable sales growth and improvement in the adjusted EBITA margin for the full year 2020.

The company had previously guided for a 4 percent to 6 percent increase in comparable sales and a 100 basis-point improvement in its profit margin this year.

© Thomson Reuters 2020

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