(pressebox) Hamburg, 12.10.2009,
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- Strong improvement of EBITA margin before restructuring and acquisition-related charges and a EUR 87 million provision release
- Comparable sales down 11%, mainly attributable to Consumer Lifestyle and Lighting, up from the 19% decline visible in the second quarter
- Double-digit growth in emerging markets for Healthcare not fully offsetting declines in the US
- Restructuring and acquisition-related charges of EUR 125 million reflect ongoing reduction of our cost base
- Free cash flow of EUR 353 million exceeded EBITA in the quarter
Gerard Kleisterlee, President and CEO of Royal Philips Electronics:
"Our Q3 results are a reflection of our strong fundamentals and the proactive manner in which we have been managing our costs, allowing us to deliver an underlying profitability of 6.8% of sales in the quarter, among the highest in recent years for the third quarter. We continue to invest in our portfolio of global leading businesses in Healthcare, Consumer Lifestyle and Lighting. We have a strong global brand that is still increasing in strength, climbing one notch to number 42 in the Interbrand top-100 global brand ranking, and we have an increasingly strong presence in emerging markets like India and China which are less affected by the economic downturn.
In addition, the decisive action we took at the end of 2008 to focus on cost and cash management is increasingly becoming visible in our performance. This has led to a set of encouraging results in the third quarter, especially if you look at the year-over-year improvement in earnings and cash flow. I would also like to highlight that most businesses across the Company saw further improvement in both comparable sales and underlying earnings compared to the previous quarter, and we are fully focused on continuing this trend in the fourth quarter.
Our continued ability to increase our cash flow by bringing down working capital allowed us to sustain our investments in growth initiatives while maintaining a strong balance sheet. Recent examples are the acquisition of Saeco and our investments in establishing chains of Philips-branded stores for Consumer Lighting in China and India.
We will continue to introduce innovative products in the coming quarter, including a new range of therapy products to better treat sleep apnea patients and new LED-based lighting solutions to light up offices, gardens and retail outlets.
We have been responding to the tough economic environment by stepping up our efforts to make Philips a more customer-focused, agile and simpler company. I believe that our Q3 results show that we are making good progress thanks to the efforts of a committed and engaged global workforce. Therefore, I remain confident that Philips will come out of this recession as a stronger company and a leader in our field."
Click on one of the links below to listen to the audio quote of Gerard Kleisterlee (available in English and Dutch). More information is available on our online news center: www.newscenter.philips.com
Forward-looking statements
This document contains certain forward-looking statements with respect to the financial condition, results of operations and business of Philips and certain of the plans and objectives of Philips with respect to these items, in particular the paragraphs on "Looking ahead" and "Outlook". Examples of forward-looking statements include statements made about our strategy, estimates of sales growth, future EBITA and future developments in our organic business. By their nature, these statements involve risk and uncertainty because they relate to future events and circumstances and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these statements.
These factors include but are not limited to domestic and global economic and business conditions, the successful implementation of our strategy and our ability to realize the benefits of this strategy, our ability to develop and market new products, changes in legislation, legal claims, changes in exchange and interest rates, changes in tax rates, pension costs and actuarial assumptions, raw materials and employee costs, our ability to identify and complete successful acquisitions and to integrate those acquisitions into our business, our ability to successfully exit certain businesses or restructure our operations, the rate of technological changes, political, economic and other developments in countries where Philips operates, industry consolidation and competition. As a result, Philips’ actual future results may differ materially from the plans, goals and expectations set forth in such forward-looking statements. For a discussion of factors that could cause future results to differ from such forward-looking statements, see the Risk management chapter included in our Annual Report 2008 and the "Risk and uncertainties" section in our semi-annual financial report for the six months ended June 28, 2009.
Third-party market share data
Statements regarding market share, including those regarding Philips’ competitive position, contained in this document are based on outside sources such as research institutes, industry and dealer panels in combination with management estimates. Where information is not yet available to Philips, those statements may also be based on estimates and projections prepared by outside sources or management. Rankings are based on sales unless otherwise stated.
Use of non-GAAP information
In presenting and discussing the Philips Group’s financial position, operating results and cash flows, management uses certain non-GAAP financial measures. These non-GAAP financial measures should not be viewed in isolation as alternatives to the equivalent IFRS measures and should be used in conjunction with the most directly comparable IFRS measures. A reconciliation of such measures to the most directly comparable IFRS measures is contained in this document. Further information on non-GAAP measures can be found in our Annual Report 2008.
Use of fair-value measurements
In presenting the Philips Group’s financial position, fair values are used for the measurement of various items in accordance with the applicable accounting standards. These fair values are based on market prices, where available, and are obtained from sources that are deemed to be reliable.
Readers are cautioned that these values are subject to changes over time and are only valid at the balance sheet date. When observable market data does not exist, we estimated the fair values using appropriate valuation models. They require management to make significant assumptions with respect to future developments, which are inherently uncertain and may therefore deviate from actual developments. Critical assumptions used are disclosed in our 2008 financial statements. Independent valuations may have been obtained to support management’s determination of fair values.
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