Philips beats Q2 estimates boosted by cost savings, insurance payout
Business
The Dutch medical device maker's earnings before interest, tax and amortisation (EBITA) rose 9.3%
(Reuters) – Philips reported second-quarter results that exceeded analysts' expectations on Monday, boosted by cost savings from job cuts and insurance income linked to its Respironics product liability claims, sending its shares more than 7% higher in early trading.
The Dutch medical device maker's earnings before interest, tax and amortisation (EBITA) rose 9.3% to 495 million euros ($537.4 million) in the second quarter, beating the 433 million euros expected by analysts polled by the company.
Adjusted EBITA margin rose to 11.1% of sales, compared with 10.1% in the same period last year. Analysts were expecting it to fall to 9.7%.
Since late 2022, Philips has said it would slash up to 10,000 jobs in an attempt to restore profitability and improve product safety.
"We announced that we would reduce 10,000 roles. We did 8,000 in the first year, 2023. This year, we have reduced 1,000 roles," said CEO Roy Jakobs in a press call. "You see the benefits coming back in the quarter."
The Amsterdam-based group said it saved 195 million euros between April and June through such productivity improvements. It also received 538 million euros of insurance income from liability claims related to its recalled Respironics products.
Philips said during the first quarter it had agreed to pay $1.1 billion to settle all personal injury claims filed in the US related to its Respironics breathing devices and ventilators.
For three years, the group has grappled with the fallout of its recall of millions of devices, because of concerns that foam used in them could degrade and become toxic, carrying potential cancer risks.
Its quarterly sales rose 2% year-on-year to 4.5 billion euros, in line with expectations.
Philips reiterated its financial targets for the rest of the year.
