Philips share increases in double digits: Philips did unexpectedly well in Q1 in day-to-day business

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Nevertheless, the Dutch Siemens Healthineers competitor suffered another setback because of expensive provisions. He wrote deep red numbers. The net loss more than quadrupled compared to the same period last year and amounted to 665 million euros. The group set aside 575 million euros for legal disputes in the USA relating to the recall of ventilators and devices for sleep therapy. Additional costs were also incurred for the ongoing austerity program with thousands of job cuts. In day-to-day business, however, Philips performed noticeably better than feared in terms of sales and adjusted earnings.

Compared to the previous year, sales increased by 6 percent to 4.2 billion euros. Analysts had expected growth of just over two percent. Earnings before interest, taxes and goodwill amortization (EBITA), adjusted for special effects, climbed by almost half to 359 million euros – here, too, experts had expected a much lower value. Philips attributed the performance primarily to a further improved situation in the supply chain. Comparable order intake was stable, with more orders in diagnostics and treatment offsetting weaker orders in the healthcare connectivity business.

Philips wants to settle US class action lawsuit for 575 million euros

The medical technology manufacturer Philips can settle a first class action lawsuit in the USA over the recall of ventilators.

The Dutch group made provisions of 575 million euros for this in the first quarter, said CEO Roy Jakobs on Monday. “We are happy that we can solve this case. We continue to work on solutions for the other cases.” The first class action lawsuit was about economic losses that patients said they had suffered from using the defective ventilators. Another – potentially more costly – class action lawsuit alleging medical consequences and individual patient claims for damages are pending. In addition, Philips is working on an agreement with the US Department of Justice and the FDA.

However, it is still uncertain how these negotiations will end, so that Philips cannot yet make any provisions for this, said Jakobs. “This is a positive development, but it also underlines that the consequences of the lawsuits have not yet been resolved,” wrote analysts at ING. The lawsuits concern 5.5 million ventilators against breathing pauses during sleep (apnea). The foam used in it is suspected of becoming toxic over time. Jakobs said that 95 percent of the replacement devices and repair kits were produced, and most of them were delivered to customers and the nursing service.

Stockbrokers breathed a sigh of relief on Monday: the Philips share rose by eleven percent to EUR 19.23 – also because the quarterly figures were surprisingly good. Revenue rose in the first quarter on a comparable basis by six percent to 4.2 billion euros, the operating result (Ebitda) jumped by 50 percent to 359 million euros. Analysts had expected Ebitda to fall. The recall cost Philips around 70 percent of its market value.

Philips inspires the industry – In addition, the study drives Drägerwerk

Strong business figures from the medical technology group Philips boosted the entire sector on Monday. A positive analyst comment was added to Drägerwerk.

Philips shares had soared by almost 14 percent in the morning to 19.73 euros and had thus reached the highest level since August last year. At noon there was still an increase of more than twelve percent at 19.492 euros. They were by far the best value in the leading Dutch index AEX.

Philips did unexpectedly well in day-to-day business in the first quarter. Nevertheless, the Dutch Siemens Healthineers competitor suffered another setback because of expensive provisions: it was deeply in the red.

The net loss more than quadrupled from the prior-year period as a result of provisions for litigation in the US surrounding the recall of ventilators and sleep therapy devices. According to Veronika Dubajova, an analyst at US bank Citigroup, the provisions indicate progress in the litigation, even if there are still “considerable” uncertainties.

In day-to-day business, however, Philips performed noticeably better in terms of sales and adjusted earnings than analysts feared. Philips attributed this primarily to a further improvement in the availability of parts. Comparable order intake was stable, with more orders in diagnostics and treatment offsetting weaker orders in the healthcare connectivity business.

Thanks in particular to the strong performance in the area of ​​diagnostics and treatment, Philips has exceeded expectations, wrote the expert James Vane-Tempest from the investment house Jefferies. In the healthcare sector and in the ventilation and monitoring technology business, on the other hand, the Dutch have mostly met expectations.

Analyst David Adlington from the US bank JPMorgan was somewhat more skeptical. For the second time in a row, the medical technology group has clearly exceeded its and the market’s expectations. It’s good to keep more than you promise. But his trust in the future-oriented company statements has meanwhile fallen rapidly. He pointed out that despite the strong numbers, Philips had not raised the annual targets.

Despite the price jump on Monday, Philips shares are still a long way from their record high of almost 51 euros reached in April 2021. Because since reaching this high, the price has collapsed almost continuously, only in November of last year did it find a stop at a good 12 euros. Since then, the papers have been on a recovery course.

From a technical point of view, the picture has now brightened up significantly. After the Philips shares had already moved just above the most important short, medium and long-term average curves in the last three weeks, the papers have now clearly left these trend lines behind.

In Germany, the shares of Siemens Healthineers in XETRA trading are benefiting from the business figures of Philips with a temporary increase of 3.22 percent at EUR 57.64. This put them at the top of the stagnating leading German index, the DAX. Since the beginning of the year, Siemens Healthineers shares have already gained a good 22 percent. During this period, the DAX “only” increased by 14 percent.

In the clearly rising second-tier index SDAX, Drägerwerk shares rose by 1.79 percent to EUR 45.50, making them one of the biggest winners. The first quarter should have been a silver lining, wrote analyst Alexander Galitsa from Hauck Aufhäuser Investment Banking after the preliminary figures from the provider of medical and security technology. The Lübeck could possibly exceed the annual goals.

Drägerwerk shares had soared to EUR 46.50 in the morning and thus reached the high reached on Tuesday last week since September 2022. However, the record high of almost 124 euros from 2015 is also a long way off for Drägerwerk.

AMSTERDAM / FRANKFURT (dpa-AFX) / Amsterdam (Reuters)

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