by
Barbara Kram, Editor | October 12, 2009
A strong performance
by Philips overall,
but not in health care
Royal Philips Electronics reported its third-quarter numbers today, with sales declines in the U.S. health care sector, although there was double digit growth in emerging health care markets.
The broader company posted a profit for the third quarter, enjoying strong third quarter year-over-year improvement in earnings and cash flow.
However, health care sales declined 4% on a comparable basis, compared to Q3 2008, as double-digit growth in emerging markets was offset by declines in U.S. sales in Imaging Systems, Patient Monitoring, and Clinical Care Systems. Equipment order intake declined 7%, reflecting the weak U.S. market in medical imaging equipment.
Healthcare EBITA amounted to EUR 215 million, or 11.8% of sales, excluding EUR 40 million of restructuring and acquisition-related charges. The comparable figure in Q3 2008, also excluding a EUR 45 million gain on the sale of Speech Recognition Systems, was EUR 160 million, or 8.9% of sales.
"We continue to invest in our portfolio of global leading businesses in health care, consumer lifestyle and lighting," indicated Gerard Kleisterlee, president and CEO of Royal Philips Electronics in a report to investors. He noted that the company has an "increasingly strong presence in emerging markets like India and China which are less affected by the economic downturn."
As an example of the firm's ongoing R&D commitment, Kleisterlee noted that in the coming quarter Philips will introduce innovative sleep therapy products.
Other highlights in health care include the acquisition of InnerCool Therapies, a pioneer in the emergency medicine field of therapeutic hypothermia. Philips also received certification in China for the latest addition of its economical line of ultrasound systems.
Overall, the OEM's performance reflects the erosion of capital investment in medical equipment in the U.S. since the Deficit Reduction Act took effect in 2007 and tamped down Medicare reimbursement for non-hospital-based medical imaging procedures. The current economic downturn and uncertainty in Washington over health care reform also unsettle investors.
Read the firm's key data:
http://www.philips.com/shared/assets/Downloadablefile/Investor/R_3Q09.pdf
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