Philips Profit Lifted by Lighting Business Spinoff

By Maarten van Tartwijk 

AMSTERDAM--The Netherlands' Royal Philips NV said Monday its third-quarter earnings further improved following the spin-off of its lighting business.

Adjusted earnings before interest, taxes and amortization were EUR649 million ($705.26 million), a 14% rise compared with the same period last year and ahead of analyst expectations. Sales rose 1% to EUR5.9 billion, while net profit jumped 18% to EUR383 million.

Philips shares rose by around 4.5% in Amsterdam.

The Dutch group in May spun off its lighting division through an initial public offering in a bid to focus on its faster-growing and more profitable health-care business. General Electric Co. and Siemens AG are its most important competitors in this market.

The health-care business, which sells everything from electric toothbrushes to ultrasound machines, recorded comparable sales growth of 5% in the third quarter, while order intake grew by 8%.

The introduction of new products and savings generated from the $1 billion acquisition of Volcano Corp., a U.S. medical-imaging company, were the main drivers, Philips said.

The lighting business, in which Philips still holds a 71% stake, recorded a comparable sales decline of 3% but cost-savings helped to push adjusted Ebita 26% higher. Philips plans to gradually sell its stake in the coming years.

Philips maintained its full-year outlook and said it expects earnings to further improve in the fourth quarter despite ongoing concerns about "risk due to volatility in the markets in which we operate."

Write to Maarten van Tartwijk at [e-mail]

(END) Dow Jones Newswires

October 24, 2016 06:17 ET (10:17 GMT)

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