Koninklijke Phillips Electronics N.V. ( PHG )
reported results for the second quarter of 2012, with net income of
€167 million ($215 million) compared to a net loss of €1.3 billion
in the prior-year period. Goodwill and intangible asset impairment
charges of €1.4 million that occurred in second quarter of 2011 led
to a net loss.
Excluding the impairment charges benefit, net income for the
quarter was €127 million, driven by higher operating earnings.
Quarterly Details
For the second quarter of fiscal 2012, the company reported
revenue growth of 5.0% to €5.8 billion ($7.6 billion) compared to
€5.2 billion in the prior-year quarter. The revenue increase was
primarily driven by 13% growth in group nominal sales, which
included a 7% positive effect from currency.
Earnings before Interest, Tax and Amortization (EBITA) increased
€79 million ($101.5 million) year-over-year. The increase was
primarily attributable to higher earnings at Healthcare and
Consumer Lifestyle, which was partially offset by higher cost at
Innovation, Group & Services and lower EBITDA at Lighting.
Segment Details
Healthcare sales for the quarter grew 7% year
over year driven by increases across its businesses, especially
double-digit growth at the Patient Care & Clinical Informatics
and Customer services, high-single-digit growth at Imaging systems
and mid-single digit growth at Home Healthcare Solutions.
Geographically, revenue growth in mature markets was 4% year
over year with North America growing 7% year over. Sales from
Western Europe declined 1% during the reported quarter. Emerging
markets reported strong revenue growth of 22% year over year. This
was, however, partially offset by higher acquisition related
charges compared to the prior-year quarter.
The Consumer Lifestyle segment posted revenue
growth of 9% during the quarter. On a comparable basis, sales grew
3% driven by high single-digit growth in the combined growth
businesses such as Personal Care, Heath& Wellness and Domestic
Appliances.
This was partially offset by a decline at Lifestyle
Entertainment. Excluding Licenses and Lifestyle Entertainment,
comparable sales grew 8% year over year. Asia reported a
double-digit growth while North America posted mid single digit
growth. This was partially offset by a decline in Western
Europe.
During the reported quarter, the Lightning
segment reported sales growth of 6% year over year driven by
double-digit growth at Light Sources & Electronics and high
single-digit sales growth at Automotive. On a geographic basis,
growth markets reported sales growth of 13% while high single-digit
growth was witnessed in North America. However, Europe reported a
year over year decline in revenues.
Sales in the Innovation, Group & Services
segment declined to €97 million from €112 million primarily due to
lower license income.
Geographical Growth
On a geographical basis, comparable sales in the growth
geographies increased 11% in the fourth quarter.
The company's growth markets include all markets excluding the
U.S, Canada, Western Europe, Australia, New Zealand, South Korea
and Japan.
The above mentioned geographies are classified as mature
markets; revenue growth in the mature markets was 2% year over
year.
Cash and Balance Sheet
Cash flow from operating activities declined significantly to
€52 million ($66.8 million) compared to €63 million in the
comparable prior-year quarter. The decline was attributable to
higher working capital outflow primarily related to higher vendor
payments.
Capital expenditures for the quarter increased to €263 million
($338 million) from €243 million attributable to higher investments
in the Lighting and Consumer Lifestyle segments.
At the end of the second quarter, the company had a debt
position of €1.8 billion ($2.3 billion) compared to €156 million in
the prior-year quarter. Increase in debt was primarily attributable
to treasury stock transactions, payment of annual dividend and
negative free cash flow in the second quarter.
Phillips currently has a Zacks Rank of #1 which implies a Strong
Buy for short term (1-3 months).
KONINKLIJKE PHL (PHG): Free Stock Analysis
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