Philips Seeks to See Through Covid With 5-Year Growth Plan
Philips Profit Beats Estimates With Uptick in Demand Expected
(Bloomberg) -- Royal Philips NV said the lingering impact from the coronavirus and changes in the way health-care is delivered will help boost sales of its medical gear for years to come.
The Dutch maker of body scanners and monitors set out a target for average annual sales growth of 5% to 6% from 2021 to 2025, it said on Monday. Growth will be “modest” this year, and in the low single digits in 2021 based on the current solid order book, Philips added.
During the height of the pandemic, Philips struggled to keep up with orders for its ventilators used to help coronavirus patients with severe breathing difficulties. The company now expects to benefit from a fundamental shift in how patients receive care through remote monitoring and virtual appointments.
“We take a longer view and think we are well positioned for a higher growth even though we have to kind of navigate the short term disparities in the market,” Chief Executive Officer Frans van Houten said in a Bloomberg interview.
Providing a longer-term outlook, including improved margins, sets Philips apart from a swathe of manufacturers still unable to set mid-term goals. Shares of the Amsterdam-based company jumped 2.9% to 42.70 euros as of 11:13 a.m. local time.
While the focus remains on acute pandemic care, hospitals are now pushing ahead with surgery and other medical procedures that were put on hold. Even with increased national debtloads, governments will need to increase spending on healthcare having seen resources stretched, van Houten said.
Philips reported a 32% jump in earnings before interest, taxes and amortization to 769 million euros ($900 million) in the third quarter. That beat an average estimate of 630.6 million euros.
Philips invested more than 100 million euros on quadrupling ventilator production in just five months. A $400 million emergency order from the U.S. backfired when the state unexpectedly canceled the purchase. Philips booked a 57 million-euro provision to cover the lost contract as it seeks to find buyers for the excess stock in Africa.
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