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Royal Philips, under the leadership of CEO Roy Jakobs, reported a notable turnaround in its third-quarter earnings today, reversing last year’s losses. The Dutch health-tech firm revised its annual guidance upwards, now projecting a 6%-7% rise in comparable sales, an increase from an earlier forecast of mid-single-digit growth. This positive projection aligns with InvestingPro’s data showing a 6.83% revenue growth for the company, and a recent acceleration in revenue growth as noted in InvestingPro Tips.
The adjusted EBITA margin is now expected to be between 10%-11%, exceeding the previous high-single-digit estimate for 2023. Interestingly, despite this positive outlook, the company’s P/E Ratio stands at -7.54, according to InvestingPro Data, which may suggest that the market has yet to fully factor in these improvements. The company’s net profit for shareholders stood at €88 million ($107.1 million), a significant shift from a €1.33 billion loss the previous year. This aligns with an InvestingPro Tip that net income is expected to grow this year.
Sales saw an 11% increase to €4.47 billion, surpassing last year’s €4.31 billion and beating the consensus estimate of €4.415 billion. This growth was driven by double-digit increases in the diagnosis & treatment and connected care segments, along with high-single-digit growth in the personal health segment. The company’s position as a prominent player in the Healthcare Equipment and supplies industry, as pointed out by InvestingPro Tips, likely contributed to this performance.
The company also reported significant savings of €258 million in Q3 due to restructuring measures. Adjusted EBITA was €457 million, more than double the consensus estimate of €209 million, with an EBITA margin of 10.2%. This figure is significantly higher than the company’s EBITDA of 431.03M USD, as reported by InvestingPro Data.
Jakobs noted progress in the ongoing Philips Respironics recall. Remediation for sleep-therapy devices is nearly complete, while ventilator remediation is still underway. It’s worth noting that despite the company’s progress, management has been aggressively buying back shares, a move that is often seen as a sign of confidence in the company’s future prospects, as highlighted by InvestingPro Tips.
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