Philips Q2: Sales Flat But Orders UpPhilips Q2: Sales Flat But Orders Up

Royal Philips NV saw stagnant healthcare sales in the second quarter, but higher orders spurred optimism for the rest of 2013.

“We are quite pleased…that our healthcare equipment order intake improved by a healthy 7% compared to second quarter of last year,” Philips CEO Frans van Houten said, according to a transcript of the company's earnings call. “The growth in order intake, in part driven by new product introductions, is encouraging as it provides more underpinning for an improved second half of the year.”

The quarter also included new product developments for Philips Healthcare, including 510(k) clearance for the low-dos AlluraClarity interventional x-ray system and introduction of a range of mother and child care products in India and Africa, according to the company’s earnings release. 

Still, van Houten remained grounded in his outlook for the year.

“…The year started slow and that effect of the slow start will still work its way through the whole year... So one quarter of good order intake doesn't compensate for a couple of quarters prior that were quite weak... So—and with that, of course, we remain committed to our targets for this year,” he said.

Philips’s healthcare sales were 2.36 million Euros for the quarter. The company saw growth in customer services, patient care and clinical informatics, and home healthcare product sales. But imaging systems, which account for more than one-third of Philips’s healthcare business, experienced a high-single-digit decline in sales.

Philips Healthcare saw double-digit year-on-year growth in emerging markets, with especially strong growth in China, according to the company."We got an SDA -- SFDA approval in China for several new healthcare products, and that is driving this strong traction that the we expect to continue also in the rest of the year," said Ron H. Wirahadiraska, Philips chief financial officer. 

Sales declined in Western Europe and North America, and like J&J, Philips called out the tough market in the United States.

“In the U.S., market conditions remained challenging, with hospitals working through the implications of the sequestration and healthcare reform and the resulting delay of some of their purchasing decisions, Wirahadiraska said. “We expect the related market uncertainties to continue in the short term, also pending the upcoming round of budgetary decision-making.”

—by Jamie Hartford, managing editor, MD+DI
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