A year after Frans van Houten took over as chief executive, there are clear
signs that restructuring and more product discipline are finally paying off
at this perennially disappointing European conglomerate whose shares are
still at half their 2007 highs.
On a comparable basis, second-quarter sales were up 5 per cent at €5.9bn,
better than investors expected. Europe was horrid, with a 4 per cent fall.
But for once, a company was not playing the blame game: rather, Philips
noted that three-quarters of revenues now come from outside the region.
Three main divisions
And, across its three main divisions, news was generally good. Lighting is
benefiting from the shift to more energy-efficient products; healthcare from
equipment and systems upgrades, with equipment order books back to
pre-crisis levels; and consumer electronics (now only a quarter of total
sales) from advances in areas such as shaving products and kitchen
appliances.
Group margin, at the earnings before interest and tax level, was 7.6 per cent,
compared with 7.1 per cent a year ago – and 8.6 per cent with restructuring
and acquisition-related charges excluded.
Negative signs
Not all the signs were so positive. Free cash flow was negative, while net
debt reached €1.8bn compared with €156m a year earlier (although hardly a
strain). Mr van Houten is confident that half the €800m cost-reduction
programme will be achieved by the end of 2012 and is standing by 2013
targets, including ebita margins of 10-12 per cent.
Philips’ shares, up 4 per cent at €16.94 yesterday, are back to a more
optimistic 14 times forward multiple. (Siemens’ are on 11 times.) That said,
a behaviour change may now be needed to push them higher.
Dit artikel is oorspronkelijk verschenen op z24.nl