While Royal Philips Electronics reported a net loss of EUR1.35 billion ($1.91 billion)—a decline of EUR1.61 billion ($2.27 billion) compared with the 2010 second quarter—the healthcare sector experienced a sales increase of 8 percent on a comparable basis, driven by high single-digit growth in all businesses.
“Our second quarter results were impacted by near-term operational challenges, weaker markets and a significant impairment charge,” said Frans van Houten, president and CEO of Royal Philips, who added that “healthcare performed strongly, improving earnings and growing comparable sales by 8 percent over last year.”
For the healthcare sector, the company reported that the earnings before interest, taxes and amortization (EBITA) increased by EUR60 million ($84.76 million) quarter-over-quarter to EUR276 million ($389.9 million), with improvement in most units, including home healthcare, imaging systems, patient care and clinical informatics, as well as customer services. The unit’s restructuring and acquisition-related earnings were EUR47 million ($66.39 million) lower than in the second quarter of 2010.
From a regional perspective, comparable sales in mature markets of the healthcare unit grew 4 percent year-on-year, with sales in North America 8 percent higher than in the second quarter of 2010. Growth-market sales grew 22 percent, with “notably better sales [in] imaging systems,” Philips reported.
The healthcare unit’s equipment orders in North America were 10 percent higher than in the 2010 second quarter. Equipment orders in markets outside of North America were 4 percent lower year-on-year, with growth-market equipment orders growing by 5 percent.
EBITA of the healthcare unit decreased by EUR759 million ($1.07 billion) year-on-year. EBITA was impacted by a EUR824 million ($1.16 billion) goodwill impairment charge in home healthcare following a “slower-than-planned post-recession recovery and revised growth projections for the U.S. sleep market,” stated the company, which “includes a value adjustment from a discount rate increase, reflecting growing economic uncertainties.”
Overall, for Royal Philips, the number of employees grew by 3,103 in the quarter to 120,351, largely due to the Preethi acquisition in the consumer lifestyle unit and an increase in temporary headcount at consumer lifestyle, according to the company. Compared with 2010 second quarter, the number of healthcare employees increased by 2,125, mainly permanent personnel, mostly in growth markets, as well as from acquisitions.