First Quarter Results 04

Group comparable sales growth flat, with sales in growth geographies up 5%

Healthcare comparable equipment order intake up 1%

Currency negatively impacted sales by 5% and EBITA by 1.8 percentage points of sales

EBITA of EUR 314 million, compared to EUR 402 million in Q1 2013

EBITA excluding restructuring and acquisition-related charges amounted to EUR 368

million, or 7.3% of sales, compared to 8.0% in Q1 2013

Net income of EUR 137 million, compared to EUR 162 million in Q1 2013

Free cash outflow of EUR 72 million, excluding a EUR 273 million pension contribution

related to the de-risking of the Dutch pension plan

Inventories improved by 0.6 percentage points to 14.9% of sales

Company reiterates commitment to 2016 financial targets

Frans van Houten, CEO:

Our first-quarter financial results reflect a challenging start to the year. Significant currency impact, market headwinds in, among others, China and Russia, and the business impact of the voluntary suspension at our healthcare production facility in Cleveland resulted in flat comparable sales growth and a decline in EBITA as a percentage of sales of 130 basis points. We recorded a lower level of profitability at Healthcare, whereas Lighting and Consumer Lifestyle continued to deliver a year-on-year operational margin improvement.

At Lighting, LED-based sales grew by 37%, and we are encouraged by the positive reception given by our customers to our broad range of new connected lighting solutions demonstrated at the Light + Building trade fair in Germany. Consumer Lifestyle grew 7%, with a particularly strong performance at Floor Care and Air Purifiers. At Healthcare, we see encouraging developments in our order book and increasing opportunities for multi-year deals.

Our multi-year transformation program Accelerate! continues to show strong traction, driven by a solid innovation pipeline, investments in future growth and a company-wide focus on improved operational and financial performance. We are also taking comprehensive measures to raise the efficacy of our quality management system to Philips Excellence standards in close collaboration with industry experts. Our overhead cost reduction program and our Design for Excellence program are on track, thus helping to partly offset the negative currency impact.

Looking ahead, 2014 will be a challenging year, but we remain very confident of achieving our 2016 mid-term financial targets.

Q1 financials overview:

View infographic

LINK:	http://www.newscenter.philips.com/gb_en/standard/news/press/2014/Phili...
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