Although Royal Philips Electronics Monday reported a 94 percent drop in profits for the 2009 second quarter--from €735 million ($1.3 billion U.S.) in 2007 to €45 million ($62.86 million U.S.)--the healthcare unit booked a much smaller decline from year-ago results.
Philips said its healthcare sector reported comparable sales decline of €30 million ($41.9 million U.S.) with particular "softness" in mature markets, like North America, which partially offset by growth in emerging markets. Specifically, the company reported that its earnings before the deduction of interest, tax and amortization expenses (EBITA) were €158 million ($220.9 million U.S.) for the second quarter of 2009, compared with €188 million ($262.77 million U.S.) in the year-over-year results. Philips noted that customer services was offset by lower sales at clinical care systems, health informatics (mainly patient monitoring) and imaging systems. Also, the company reported showed a small decline in home healthcare solutions.
Gerard Kleisterlee, president and CEO of Royal Philips, said that the company "did not see a material improvement in consumer or professional markets in the past three months."
"We remain cautious about the overall economy and the markets we're operating in and will not shy away from implementing further cost measures where needed, Kleisterlee said. "We do, however, expect our comparative performance to be better in the second half of 2009 than in the first half of the year as our cost-saving programs have an increasing impact on our earnings."
The 2009 second quarter EBITA results included restructuring and acquisition-related charges of €24 million ($33.53 million U.S.), according to the company. Philips expects that its healthcare sector acquisition-related and restructuring charges for the 2009 third quarter will be approximately €50 million ($69.86 million U.S.).
In the first six months of 2009, the company said that a total charge of €160 million ($223.4 million U.S.) was recorded as a result of restructuring projects, including related asset impairments and inventory write-downs. The healthcare restructuring costs totaled $10 million, compared to nil in 2008.