Koninklijke Philips N.V. PHG reported a loss of €0.36 cents per share in the fourth quarter of 2024, which declined from the year-ago quarter’s reported figure of €0.04 per share.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The company’s sales decreased 0.4% on a year-over-year basis to €5 billion.
Comparable sales grew 1% year over year, driven by an increase in the Connected Care segment. Comparable sales in the Diagnosis & Treatment and Personal Health segments declined due to weaker demand from consumers and health systems in China.
Koninklijke Philips N.V. Price, Consensus and EPS Surprise
Koninklijke Philips N.V. price-consensus-eps-surprise-chart | Koninklijke Philips N.V. Quote
Further, Philips’ comparable order intake increased 2% year over year in the reported quarter despite a double-digit decline in China.
Sales declined 9% year over year on a comparable basis in growth geographies. Sales in mature geographies showed mid-single-digit growth with strong contributions from all regions.
PHG’s Segmental Update
Diagnosis & Treatment revenues declined 2.3% year over year from the year-ago quarter to €2.44 billion. Comparable sales declined 1% year over year, primarily due to a double-digit drop in China, which outweighed strong growth in other regions. While Image Guided Therapy saw solid growth, it was offset by a decline in Precision Diagnosis.
Connected Care revenues increased 5.4% year over year to €1.42 billion. Comparable sales grew 7% from the year-ago quarter, benefiting from a low comparison base due to a sales provision recorded in the fourth quarter of 2023 for the Respironics recall remediation.
Personal Health revenues fell 3.9% year over year to €1.02 billion. Comparable sales declined 2% year over year, primarily driven by a double-digit drop in China due to weakened consumer sentiment.
Other segment sales amounted to €151 million, up 7.1% on a year-over-year basis.
Philips continued to lead the market with AI-driven innovations across its product offerings. More than 50% of its sales in the fourth quarter of 2024 came from products launched in the past three years, showcasing its commitment to new technologies and upgrades.
PHG’s Operating Details
Gross margin expanded 340 basis points (bps) on a year-over-year basis to 38.9% in the reported quarter.
General & administrative expenses, as a percentage of sales, were 2.7%, which contracted 10 bps on a year-over-year basis. Moreover, selling expenses contracted 50 bps to 23.6%. Research & development expenses increased 50 bps to 9.4%.
Restructuring, acquisition-related and other items amounted to a net gain of €286 million compared with €548 million a year ago.
Operating model productivity, procurement and other productivity programs delivered savings of €47 million, €56 million and €59 million, respectively. This resulted in total savings of €163 million.
Phillips’ adjusted EBITA — the company’s preferred measure of operational performance — rose 4% year over year to €679 million. EBITA margin expanded 60 bps on a year-over-year basis to 13.5% in the reported quarter.
Diagnosis & Treatment’s adjusted EBITA margin expanded 160 bps on a year-over-year basis to 12.1%.
Connected Care’s adjusted EBITA margin was 15% in the reported quarter, which remained flat year over year.
Personal Health’s adjusted EBITA margin contracted 190 bps on a year-over-year basis to 18%.
PHG’s Balance Sheet
As of Dec. 31, 2024, Philips’ cash and cash equivalents were €2.4 billion compared with €1.5 billion as of Sept. 30, 2024.
Total debt was €7.639 billion compared with €8.032 billion as of Sept. 30, 2024.
Operating cash inflow was €1.4 billion against the year-ago quarter’s operating cash flow of €1.3 billion.
In the quarter under review, free cash flow was €1.2 billion compared with the year-ago quarter’s €1.1 billion.
PHG Initiates Weak 2025 Guidance
Philips stock has lost 0.5% year to date against the Zacks Medical sector’s growth of 4.5%. A significant decline in demand from China has led to lowered guidance for 2025. These factors may also put downward pressure on PHG’s shares.
Philips expects to deliver 1-3% of comparable sales growth.
Further, adjusted EBITA margin is expected to be 30-80 bps to 11.8%-12.3%
Free cash flow before payment of the $1.1 billion cash-out relating to the US medical monitoring and personal injury settlements will be at the lower end of the range of €1.4 billion-€1.6 billion. Net of this cash-out, free cash flow is likely to be in the range of €0.4 billion-€0.6 billion.
PHG’s Zacks Rank & Stocks to Consider
Philips currently has a Zacks Rank #3 (Hold).
BWX Technologies BWXT, Salesforce CRM and Cogent Communications CCOI are some better-ranked stocks that investors can consider in the broader sector. Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BWX Technologies shares have gained 2.5% year to date. BWXT is set to report its fourth-quarter 2024 results on Feb. 24.
Salesforce shares have gained 29.4% year to date. CRM is set to report its fourth-quarter fiscal 2025 results on Feb. 26.
Cogent Communications shares have lost 6.9% year to date. CCOI is set to report its fourth-quarter 2024 results on Feb. 27.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>Salesforce Inc. (CRM) : Free Stock Analysis Report
Koninklijke Philips N.V. (PHG) : Free Stock Analysis Report
Cogent Communications Holdings, Inc. (CCOI) : Free Stock Analysis Report
BWX Technologies, Inc. (BWXT) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
