Philips achieves 2013 sales targets, remains cautious about future

Philips has reported a successful Q4 2013, with a comparable sales growth of 7% and operational results up by 20%. The company says it achieved its 2013 sales targets set in 2011.

The company’s EBITA amounted to €884 million, or 13% of sales, compared with €50 million in Q4 2012. Philips’ net income amounted to €412 million for the quarter, with a free cash flow of €608 million.

“The fourth quarter of 2013 was another good quarter for Philips, despite the challenging economic environment,” said Philips CEO Frans van Houten.

“In the quarter, Lighting and Consumer Lifestyle both delivered strong comparable sales growth of 8%. At Healthcare, comparable sales increased by 4%, while order intake declined 1% related to the weak markets in USA and Europe. The operational profitability of all sectors improved substantially, driven by good sales growth, gross margin expansion of two percentage points and the productivity gains, all coming from the Accelerate! program, and despite currency headwinds.

“We achieved the mid-term financial targets we had set in 2011, thanks to the hard work of our employees. We delivered a compound annual growth rate for comparable sales over the period 2012-2013 of 4.5%, compared to our target of 4-6%, and did so in a lower GDP growth environment than originally anticipated. Our reported EBITA as a percentage of sales was 10.5%, within our target range of 10-12%, which we achieved despite currency headwinds and changed pension accounting. We also significantly improved our return on invested capital to 15.3%, above the target range of 12-14%.”

During the quarter, Philips secured a 10-year contract to deliver and service an integrated digital lighting system with 13,000 connected LED fixtures and adaptive energy management controls for parking garages in Washington, DC, as well as an order to renovate most of Buenos Aires’ 125,000 street lights with the CityTouch connected LED system.

“Looking at 2014, we remain cautious because of ongoing macroeconomic uncertainties, currency headwinds and softer order intake in Q4 2013,” van Houten said. “Therefore, we expect that 2014 will be a modest step towards our 2016 targets, also taking into account restructuring to drive the new productivity targets and investments in additional growth initiatives.”