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Koninklijke Philips NV ADR PHG Stock Quote

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Morningstar‘s Stock Analysis PHG

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Headwinds Still Hurt Philips in Q2, and We Take Guidance With a Grain of Salt; Reducing FVE

Javier Correonero Equity Analyst

Analyst Note

| Javier Correonero |

Narrow-moat Philips' second-quarter results were weak. The company had already highlighted expected supply chain constraints and inflationary issues three months ago, but the hit was harder than expected. Sales declined 7% organically, with China the main detractor from performance, as prolonged lockdowns made sales and order intake decline 30% year over year. Some Philips factories in China had to suspend production for two months because of component shortages. Management reduced its 2022 outlook to 1%-3% organic sales growth and around a 10% adjusted EBITA margin. Our forecasts already assumed 2.2% organic sales growth in 2022 (more conservative than management’s previous guidance of 3%-5%) and an EBITA margin below 10%. Management also moderated its midterm guidance, which it set in November 2020, from 5%-6% annual sales growth to 4%-6% until 2025.

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Key Statistics PHG

Company Profile PHG

Business Description

Philips is a diversified global healthcare company operating in three segments: diagnosis and treatment, connected care, and personal health. About 50% of the company's revenue comes from the diagnosis and treatment segment, which features imaging systems, ultrasound equipment, image-guided therapy solutions and healthcare informatics. The connected care segment (27% of revenue) encompasses monitoring and analytics systems for hospitals and sleep and respiratory care devices, whereas the personal health business (remainder of revenue) includes electric toothbrushes and men's grooming and personal-care products. In 2021, Philips generated EUR 17.2 billion in sales and had 80,000 employees in over 100 countries.

Philips Center, Amstelplein 2
Amsterdam, 1096 BC, Netherlands
T +31 205977777
Industry Medical Devices
Most Recent Earnings Jun 30, 2022
Fiscal Year End Dec 31, 2022
Stock Type
Employees 78,548

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