Earnings Release • Apr 22, 2014
Earnings Release
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"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 FloorCare andAirPurifiers.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 oset 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."
Healthcare comparable sales showed a 2% decline year-on-year. Home Healthcare Solutions posted mid-singledigit growth, while Customer Services and Patient Care & Clinical Informatics achieved low-single-digit growth. Imaging Systems recorded a double-digit decline. In growth geographies, comparable sales showed a mid-singledigit decline. Currency-comparable equipment order intake increased by 1% year-on-year, with Patient Care & Clinical Informatics recording double-digit growth, while Imaging Systems posted a mid-single-digit decline. EBITA margin excluding restructuring and acquisition-related charges declined to 8.8%, a decrease of 1.7 percentage points year-on-year.
Consumer Lifestyle comparable sales increased by 7%, with high-single-digit growth at Domestic Appliances and mid-single-digit growth at Health & Wellness and Personal Care. In growth geographies, comparable sales showed a double-digit increase, while mature geographies achieved low-single-digit growth. EBITA margin excluding restructuring and acquisition-related charges increased to 10.6%, a year-on-year improvement of 0.7 percentage points.
Lighting comparable sales were flat year-on-year. Lumileds and Automotive achieved double-digit growth, while Light Sources & Electronics and Professional Lighting Solutions posted a low-single-digit decline and Consumer Luminaires recorded a high-single-digit decline. LED-based sales grew by 37% compared to Q1 2013 and now represent 33% oftotal Lighting sales. In growth geographies, comparable sales (excluding OEM Lumileds) showed a low-single-digit increase. EBITA margin excluding restructuring and acquisition-related charges was 9.0%, a yearon-year improvement of 0.6 percentage points.
As of the end of March, Philips had completed 14% of the EUR 1.5 billion share buy-back program.
Please refer to page 19 of this press release for more information about forward-looking statements, third-party market share data, use of non-GAAP information and use of fair-value measurements.
in millions of euros unless otherwise stated
| Q1 | Q1 | |
|---|---|---|
| 2013 | 2014 | |
| Sales | 5,258 | 5,020 |
| EBITA | 402 | 314 |
| as a % of sales | 7.6 | 6.3 |
| EBIT | 305 | 226 |
| as a % of sales | 5.8 | 4.5 |
| Financial income (expenses) | (83) | (69) |
| Income taxes | (69) | (39) |
| Results investments in associates | 1 | 21 |
| Net income from continuing operations | 154 | 139 |
| Discontinued operations | 8 | (2) |
| Net income | 162 | 137 |
| Net income attributable to shareholders per common share (in euros) - diluted |
0.17 | 0.15 |
in millions of euros unless otherwise stated
| Q1 | Q1 | % change | ||
|---|---|---|---|---|
| 2013 | 2014 | nominal | compar able |
|
| Healthcare | 2,127 | 1,966 | (8) | (2) |
| Consumer Lifestyle | 1,003 | 1,016 | 1 | 7 |
| Lighting | 1,975 | 1,892 | (4) | 0 |
| Innovation, Group & Services |
153 | 146 | (5) | (10) |
| Philips Group | 5,258 | 5,020 | (5) | 0 |
in millions of euros unless otherwise stated
| Q1 | Q1 | % change | ||
|---|---|---|---|---|
| 2013 | 2014 | nominal | compar able |
|
| Western Europe | 1,341 | 1,328 | (1) | (1) |
| North America | 1,650 | 1,530 | (7) | (3) |
| Other mature geographies |
493 | 450 | (9) | 3 |
| Total mature geographies | 3,484 | 3,308 | (5) | (2) |
| Growth geographies | 1,774 | 1,712 | (3) | 5 |
| Philips Group | 5,258 | 5,020 | (5) | 0 |
in millions of euros
| Q1 | Q1 | |
|---|---|---|
| 2013 | 2014 | |
| Healthcare | 222 | 152 |
| Consumer Lifestyle | 98 | 108 |
| Lighting | 147 | 138 |
| Innovation, Group & Services | (65) | (84) |
| Philips Group | 402 | 314 |
as a % of sales
| Q1 | Q1 | |
|---|---|---|
| 2013 | 2014 | |
| Healthcare | 10.4 | 7.7 |
| Consumer Lifestyle | 9.8 | 10.6 |
| Lighting | 7.4 | 7.3 |
| Innovation, Group & Services | (42.5) | (57.5) |
| Philips Group | 7.6 | 6.3 |
in millions of euros
| Q1 | Q1 | |
|---|---|---|
| 2013 | 2014 | |
| Healthcare | (2) | (21) |
| Consumer Lifestyle | (1) | − |
| Lighting | (19) | (33) |
| Innovation, Group & Services | 3 | − |
| Philips Group | (19) | (54) |
in millions of euros unless otherwise stated
| Q1 | Q1 | |
|---|---|---|
| 2013 | 2014 | |
| Healthcare | 176 | 109 |
| Consumer Lifestyle | 84 | 96 |
| Lighting | 110 | 108 |
| Innovation, Group & Services | (65) | (87) |
| Philips Group | 305 | 226 |
| as a % of sales | 5.8 | 4.5 |
| in millions of euros | ||
|---|---|---|
| Q1 | Q1 | |
| 2013 | 2014 | |
| Net interest expenses | (74) | (57) |
| Other | (9) | (12) |
| (83) | (69) |
in millions of euros
| Q1 | Q1 | |
|---|---|---|
| 2013 | 2014 | |
| Beginning cash balance | 3,834 | 2,465 |
| Free cash flow | (431) | (345) |
| Net cash flow from operating activities |
(228) | (172) |
| Net capital expenditures | (203) | (173) |
| Acquisitions and divestments of businesses |
(11) | (18) |
| Other cash flow from investing activities | (70) | − |
| Treasury shares transactions | (222) | (107) |
| Changes in debt/other | 16 | (199) |
| Net cash flow discontinued operations | (50) | (69) |
| Ending balance | 3,066 | 1,727 |
• Financial income and expenses amounted to a net expense of EUR 69 million, a decrease of EUR 14 million compared with Q1 2013. This was mainly attributable to lower interest expenses on reduced debt.
• Operating activities resulted in a cash outflow of EUR 172 million, compared to an outflow of EUR 228 million in Q1 2013. Q1 2013 included the payment of the EUR 509 million European Commission fine. Excluding this impact, lower cash flows from operating activities in Q1 2014 were mainly due to the Dutch pension plan contribution and higher working capital requirements.
in millions of euros
Inventories as a % of sales1)
2) Excludes inventories of Audio, Video, Multimedia and Accessories business
11 : 89
15 : 85
12 : 88
ratio:
• Gross capital expenditures on property, plant and equipment were EUR 31 million lower than in Q1 2013, mainly due to lower investments at Lighting and Consumer Lifestyle.
1) Number of employees excludes discontinued operations. Discontinued operations, comprising the Audio, Video, Multimedia and Accessories business, had 1,962 employees at end of Q1 2014 (Q4 2013: 1,992; Q1 2013: 1,970).
2) Adjusted to reflect a change in employees reported in the Consumer Lifestyle sector.
in millions of euros unless otherwise stated
| Q1 | Q1 | |
|---|---|---|
| 2013 | 2014 | |
| Sales | 2,127 | 1,966 |
| Sales growth | ||
| % nominal | (4) | (8) |
| % comparable | (1) | (2) |
| EBITA | 222 | 152 |
| as a % of sales | 10.4 | 7.7 |
| EBIT | 176 | 109 |
| as a % of sales | 8.3 | 5.5 |
| Net operating capital (NOC) | 7,888 | 7,443 |
| Number of employees (FTEs) | 37,270 | 36,506 |
Sales
in millions of euros
EBITA
• Currency-comparable equipment orders showed low-single-digit growth year-on-year. Patient Care & Clinical Informatics recorded double-digit growth. Imaging Systems posted a mid-single-digit decline.
*Excluding the Audio, Video, Multimedia and Accessories business
| Q1 | Q1 | |
|---|---|---|
| 2013 | 2014 | |
| Sales | 1,003 | 1,016 |
| Sales growth | ||
| % nominal | 9 | 1 |
| % comparable | 10 | 7 |
| EBITA | 98 | 108 |
| as a % of sales | 9.8 | 10.6 |
| EBIT | 84 | 96 |
| as a % of sales | 8.4 | 9.4 |
| Net operating capital (NOC) | 1,092 | 1,321 |
| Number of employees (FTEs) | 17,0951) | 17,103 |
1) Adjusted to reflect a change of reported employees
in millions of euros
EBITA
EBITA amounted to EUR 108 million, or 10.6% of sales, compared to EUR98 million, or 9.8% of sales, in Q1 2013.
Excluding restructuring and acquisition-related charges, EBITA was EUR 108 million, or 10.6% of sales, compared to EUR 99 million, or 9.9% of sales, in Q1 2013. The improvement of0.7 percentage points was largely attributable to higher gross margins.
• Restructuring and acquisition-related charges in Q2 2014 are expected to total approximately EUR 5 million.
in millions of euros unless otherwise stated
| Q1 | Q1 | |
|---|---|---|
| 2013 | 2014 | |
| Sales | 1,975 | 1,892 |
| Sales growth | ||
| % nominal | (2) | (4) |
| % comparable | 0 | 0 |
| EBITA | 147 | 138 |
| as a % of sales | 7.4 | 7.3 |
| EBIT | 110 | 108 |
| as a % of sales | 5.6 | 5.7 |
| Net operating capital (NOC) | 4,664 | 4,484 |
| Number of employees (FTEs) | 49,404 | 45,659 |
in millions of euros
EBITA
EBITA amounted to EUR 138 million, or 7.3% of sales, compared to EUR 147 million, or 7.4% of sales, in Q1 2013.
EBITA, excluding restructuring and acquisitionrelated charges, was EUR 171 million, or 9.0% of sales, compared to EUR 166 million, or 8.4% of sales, in Q1 2013. The year-on-year EBITA increase was driven by higher gross margins and lower overhead costs.
• Restructuring and acquisition-related charges in Q2 2014 are expected to total approximately EUR 45 million.
in millions of euros unless otherwise stated
| Q1 | Q1 | |
|---|---|---|
| 2013 | 2014 | |
| Sales | 153 | 146 |
| Sales growth | ||
| % nominal | (4) | (5) |
| % comparable | (4) | (10) |
| EBITA of: | ||
| Group Innovation | (30) | (47) |
| IP Royalties | 52 | 69 |
| Group and Regional Costs | (36) | (35) |
| Accelerate! investments | (29) | (29) |
| Pensions | (4) | (2) |
| Service Units and Other | (18) | (40) |
| EBITA | (65) | (84) |
| EBIT | (65) | (87) |
| Net operating capital (NOC) | (3,675) | (2,867) |
| Number of employees (FTEs) | 12,346 | 13,038 |
in millions of euros
EBITA
50
in millions of euros
EBITA of Service Units and Other included EUR 13 million of net costs formerly reported in the Audio, Video, Multimedia and Accessories business (Q1 2013: EUR 18 million).
Net operating capital, excluding a positive currency translation eect of EUR 165 million, increased by EUR 643 million year-on-year, mainly due to a decrease in pension liabilities, an increase in the value of currency hedges and a reclassification ofreal estate assets from the sectors to the Service Units.
• Restructuring charges are not expected to be material in Q2 2014.
in millions of euros unless otherwise stated
| Q1 | Q1 | |
|---|---|---|
| 2013 | 2014 | |
| EBITA | (1) | (11) |
| Disentanglement costs | (8) | (2) |
| Former AVM&A net costs allocated to | ||
| Consumer Lifestyle | 7 | 4 |
| Former AVM&A net costs allocated to IG&S | 18 | 13 |
| EBIT discontinued operations | 16 | 4 |
| Financial income and expenses | – | (2) |
| Income taxes | (6) | (1) |
| Net income (loss) of discontinued operations |
10 | 1 |
| Number of employees (FTEs) | 1,970 | 1,962 |
The Audio, Video, Multimedia and Accessories (AVM&A) business is reported as discontinued operations in the Consolidated statements of income and Consolidated statements of cash flows. As a result, AVM&A sales and EBITA are no longer included in the Consumer Lifestyle and Group results of continuing operations. The applicable assets and liabilities of this business are reported under Assets and Liabilities classified as held for sale in the Consolidated balance sheet.
The AVM&A business operates as a stand-alone entity named WOOX Innovations. Philips is actively discussing the sale of the business with potential buyers.
The net income of discontinued operations attributable to the AVM&A business decreased from EUR 10 million in Q1 2013 to EUR 1 million in Q1 2014, due to lower operational results at WOOX Innovations, partly oset by lower income taxes.
EBITA in Q1 2014 included a net release of restructuring charges of EUR 2 million (Q1 2013: EUR 0 million).
This document and the related oral presentation, including responses to questions following the presentation, contain 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. 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 dier materially from those expressed or implied by these statements.
These factors include but are not limited to domestic and global economic and business conditions, developments within the euro zone, 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 dier materially from the plans, goals and expectations set forth in such forwardlooking statements. For a discussion of factors that could cause future results to dier from such forwardlooking statements, see the Risk management chapter included in our Annual Report 2013.
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.
In presenting and discussing the Philips Group 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 these non-GAAP 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 2013.
In presenting the Philips Group 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 quoted prices or observable market data are not readily available, fair values are estimated using appropriate valuation models and unobservable inputs. Such fair value estimates 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 Annual Report 2013. Independent valuations may have been obtained to support management's determination of fair values.
All amounts are in millions of euros unless otherwise stated. All reported data is unaudited. Financial reporting is in accordance with the accounting policies as stated in the Annual Report 2013, unless otherwise stated.
Prior-period financials have been restated for two voluntary accounting policy changes applied as of January 1, 2014. The first voluntary accounting policy change relates to a reclassification of cost by function in the income statement. Company-wide overhead and indirect Business function costs will be brought more in line with the actual activities performed in our markets. This change has no net eect on Income from operations. The second voluntary accounting policy change relates to a change in the presentation in the cash flow statement. Up and until 2013 the cash flows
related to interest, tax and pensions were presented in a table separate from the primary consolidated statement of cash flows. The presentation change results in the separate presentation of the interest and tax cash flows in cash flow from operating activities. The pension cash flows are separately presented as part of the pension disclosures. The presentation change has no impact on the net cash flows from operating activities nor the total net cash balance as these cash flows previously used to be part of other aggregated sub lines of the primary consolidated statement of cash flows. An overview of the revised full-year 2012 and 2013 figures per quarter will be made available on the Philips website, in the Investor Relations section.
| 2013 | 2014 | |||||||
|---|---|---|---|---|---|---|---|---|
| 1st quarter 2nd quarter | 3rd quarter | 4th quarter | 1st quarter 2nd quarter | 3rd quarter | 4th quarter | |||
| Sales | 5,258 | 5,654 | 5,618 | 6,799 | 5,020 | |||
| comparable sales growth % | 1 | 3 | 3 | 7 | 0 | |||
| Gross margin | 2,124 | 2,366 | 2,370 | 2,897 | 2,018 | |||
| as a % of sales | 40.4 | 41.8 | 42.2 | 42.6 | 40.2 | |||
| Selling expenses | (1,215) | (1,276) | (1,247) | (1,463) | (1,196) | |||
| as a % of sales | (23.1) | (22.6) | (22.2) | (21.5) | (23.8) | |||
| G&A expenses | (188) | (208) | (221) | (231) | (177) | |||
| as a % of sales | (3.6) | (3.7) | (3.9) | (3.4) | (3.5) | |||
| R&D expenses | (434) | (426) | (449) | (468) | (420) | |||
| as a % of sales | (8.3) | (7.5) | (8.0) | (6.9) | (8.4) | |||
| EBIT | 305 | 509 | 464 | 713 | 226 | |||
| as a % of sales | 5.8 | 9.0 | 8.3 | 10.5 | 4.5 | |||
| EBITA | 402 | 603 | 562 | 884 | 314 | |||
| as a % of sales | 7.6 | 10.7 | 10.0 | 13.0 | 6.3 | |||
| Net income | 162 | 317 | 281 | 412 | 137 | |||
| Net income attributable to shareholders | 161 | 317 | 282 | 409 | 138 | |||
| Net income - shareholders per common share in euros - diluted |
0.17 | 0.35 | 0.31 | 0.44 | 0.15 |
all amounts in millions of euros unless otherwise stated
| 2013 | 2014 | |||||||
|---|---|---|---|---|---|---|---|---|
| January March |
January June |
January September |
January December |
January March |
January June |
January September |
January December |
|
| Sales comparable sales growth % |
5,258 1 |
10,912 2 |
16,530 2 |
23,329 3 |
5,020 0 |
|||
| Gross margin | 2,124 | 4,490 | 6,860 | 9,757 | 2,018 | |||
| as a % of sales | 40.4 | 41.1 | 41.5 | 41.8 | 40.2 | |||
| Selling expenses | (1,215) | (2,491) | (3,738) | (5,201) | (1,196) | |||
| as a % of sales | (23.1) | (22.8) | (22.6) | (22.3) | (23.8) | |||
| G&A expenses | (188) | (396) | (617) | (848) | (177) | |||
| as a % of sales | (3.6) | (3.6) | (3.7) | (3.6) | (3.5) | |||
| R&D expenses | (434) | (860) | (1,309) | (1,777) | (420) | |||
| as a % sales | (8.3) | (7.9) | (7.9) | (7.6) | (8.4) | |||
| EBIT | 305 | 814 | 1,278 | 1,991 | 226 | |||
| as a % of sales | 5.8 | 7.5 | 7.7 | 8.5 | 4.5 | |||
| EBITA | 402 | 1,005 | 1,567 | 2,451 | 314 | |||
| as a % of sales | 7.6 | 9.2 | 9.5 | 10.5 | 6.3 | |||
| Net income | 162 | 479 | 760 | 1,172 | 137 | |||
| Net income attributable to shareholders | 161 | 478 | 760 | 1169 | 138 | |||
| Net income - shareholders per common share in euros - diluted |
0.17 | 0.52 | 0.83 | 1.27 | 0.15 | |||
| Net income from continuing operations as | ||||||||
| a % of shareholders' equity | 5.8 | 9.0 | 9.4 | 10.6 | 5.8 | |||
| period ended 2013 | period ended 2014 | |||||||
| Number of common shares outstanding | ||||||||
| (after deduction of treasury shares) at the end of period (in thousands) |
905,381 | 913,874 | 915,095 | 913,338 | 913,485 | |||
| Shareholders' equity per common share | ||||||||
| in euros | 12.33 | 11.78 | 11.93 | 12.28 | 12.06 | |||
| Inventories as a % of sales1) | 15.5 | 15.7 | 16.5 | 13.9 | 14.9 | |||
| Inventories excluding discontinued operations |
3,629 | 3,696 | 3,832 | 3,239 | 3,448 | |||
| Net debt : group equity ratio | 12:88 | 16:84 | 16:84 | 11:89 | 15:85 | |||
| Net operating capital | 9,969 | 10,184 | 10,249 | 10,238 | 10,381 | |||
| Total employees2) | 118,085 | 117,369 | 115,858 | 116,082 | 114,268 | |||
| of which discontinued operations | 1,970 | 1,958 | 1,940 | 1,992 | 1,962 |
1) sales is calculated over the preceding 12 months
2) Adjusted to reflect a change of reported employees in 2013 in sector Consumer Lifestyle
in millions of euros unless otherwise stated
| January to March | ||
|---|---|---|
| 2013 | 2014 | |
| Sales | 5,258 | 5,020 |
| Cost of sales | (3,134) | (3,002) |
| Gross margin | 2,124 | 2,018 |
| Selling expenses | (1,215) | (1,196) |
| General and administrative expenses | (188) | (177) |
| Research and development expenses | (434) | (420) |
| Impairment of goodwill | − | (3) |
| Other business income | 26 | 10 |
| Other business expenses | (8) | (6) |
| Income from operations | 305 | 226 |
| Financial income | 18 | 16 |
| Financial expenses | ||
| (101) | (85) | |
| Income before taxes | 222 | 157 |
| Income tax expense | (69) | (39) |
| Income after taxes | 153 | 118 |
| Results relating to investments in associates | 1 | 21 |
| Net income from continuing operations | 154 | 139 |
| Discontinued operations - net of income tax | 8 | (2) |
| Net income | 162 | 137 |
| Attribution of net income for the period | ||
| Net income attributable to shareholders | 161 | 138 |
| Net income attributable to non-controlling interests | 1 | (1) |
| Earnings per common share attributable to shareholders | ||
| Weighted average number of common shares outstanding (after deduction of treasury shares) during the period (in thousands): |
||
| - basic | 909,7231) | 913,990 |
| - diluted | 920,6241) | 925,674 |
| Net income attributable to shareholders per common share in euros: | ||
| - basic | 0.18 | 0.15 |
| - diluted | 0.17 | 0.15 |
1) Adjusted to make 2013 comparable for the elective share dividend premium (273 thousand) issued in June 2013
in millions of euros unless otherwise stated
| March 31, | December 31, | March 30, | |
|---|---|---|---|
| 2013 | 2013 | 2014 | |
| Non-current assets: | |||
| Property, plant and equipment | 2,971 | 2,780 | 2,709 |
| Goodwill | 7,028 | 6,504 | 6,502 |
| Intangible assets excluding goodwill | 3,698 | 3,262 | 3,171 |
| Non-current receivables | 190 | 144 | 148 |
| Investments in associates | 176 | 161 | 182 |
| Other non-current financial assets | 571 | 496 | 487 |
| Deferred tax assets | 1,931 | 1,675 | 1,789 |
| Other non-current assets | 78 | 63 | 57 |
| Total non-current assets | 16,643 | 15,085 | 15,045 |
| Current assets: | |||
| Inventories | 3,631 | 3,240 | 3,449 |
| Other current financial assets | 1 | 10 | 11 |
| Other current assets | 431 | 354 | 414 |
| Derivative financial assets | 142 | 150 | 107 |
| Income tax receivable | 87 | 70 | 70 |
| Receivables | 4,278 | 4,678 | 4,612 |
| Assets classified as held for sale | 447 | 507 | 539 |
| Cash and cash equivalents | 3,066 | 2,465 | 1,727 |
| Total current assets | 12,083 | 11,474 | 10,929 |
| Total assets | 28,726 | 26,559 | 25,974 |
| Shareholders' equity | 11,160 | 11,214 | 11,015 |
| Non-controlling interests | 37 | 13 | 10 |
| Group equity | 11,197 | 11,227 | 11,025 |
| Non-current liabilities: | |||
| Long-term debt | 3,560 | 3,309 | 3,311 |
| Long-term provisions | 2,074 | 1,903 | 1,876 |
| Deferred tax liabilities | 79 | 76 | 55 |
| Other non-current liabilities | 1,983 | 1,568 | 1,503 |
| Total non-current liabilities | 7,696 | 6,856 | 6,745 |
| Current liabilities: | |||
| Short-term debt | 1,042 | 592 | 406 |
| Derivative financial liabilities | 569 | 368 | 359 |
| Income tax payable | 165 | 143 | 121 |
| Accounts and notes payable | 2,904 | 2,462 | 2,714 |
| Accrued liabilities | 2,935 | 2,830 | 2,518 |
| Short-term provisions | 751 | 651 | 644 |
| Liabilities directly associated with assets held for sale | 283 | 348 | 319 |
| Other current liabilities | 1,184 | 1,082 | 1,123 |
| Total current liabilities | 9,833 | 8,476 | 8,204 |
in millions of euros
| 1st quarter | ||
|---|---|---|
| 2013 | 2014 | |
| Cash flows from operating activities: | ||
| Net income (loss) | 162 | 137 |
| Result of discontinued operations - net of income tax | (8) | 2 |
| Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||
| Depreciation, amortization, and impairments of fixed assets | 305 | 300 |
| Impairment of goodwill and other non-current financial assets | 1 | 13 |
| Net gain on sale of assets | (4) | (6) |
| Interest income | (10) | (8) |
| Interest expense on debt, borrowings and other liabilities | 66 | 51 |
| Income tax expense | 69 | 39 |
| Results relating to investments in associates | (2) | (21) |
| Increase in working capital: | (397) | (125) |
| Decrease in receivables and other current assets | 128 | 34 |
| Increase in inventories | (205) | (242) |
| Increase (decrease) in accounts payable, accrued and other liabilities | (320) | 83 |
| Increase in non-current receivables, other assets and other liabilities | (36) | (371) |
| Decrease in provisions | (98) | (18) |
| Other items | (40) | 23 |
| Interest paid | (102) | (89) |
| Interest received | 9 | 8 |
| Income taxes paid | (143) | (107) |
| Net cash used for operating activities | (228) | (172) |
| Cash flows from investing activities: | ||
| Net capital expenditures | (203) | (173) |
| Purchase of intangible assets | (2) | (11) |
| Expenditures on development assets | (80) | (74) |
| Capital expenditures on property, plant and equipment | (124) | (93) |
| Proceeds from sale of property, plant and equipment | 3 | 5 |
| Cash from (to) derivatives and current financial assets | (72) | 2 |
| Purchase of other non-current financial assets | − | (4) |
| Proceeds from other non-current financial assets | 2 | 2 |
| Purchase of businesses, net of cash acquired | (10) | (17) |
| Net proceeds from sale of interests in businesses | (1) | (1) |
| Net cash used for investing activities | (284) | (191) |
| Cash flows from financing activities: | ||
| Proceeds from issuance (payments) of short-term debt | (19) | 78 |
| Principal payments on long-term debt | (22) | (273) |
| Proceeds from issuance of long-term debt | 17 | 14 |
| Treasury shares transactions | (222) | (107) |
| Net cash used for financing activities | (246) | (288) |
| Net cash used for continuing operations | (758) | (651) |
| 1st quarter | |
|---|---|
| 2013 | 2014 |
| Cash flows from discontinued operations: | |
| Net cash used for operating activities (50) |
(69) |
| Net cash used for discontinued operations (50) |
(69) |
| Net cash used for continuing and discontinued operations (808) |
(720) |
| Eect of change in exchange rates on cash and cash equivalents 40 |
(18) |
| Cash and cash equivalents at the beginning of the period 3,834 |
2,465 |
| Cash and cash equivalents at the end of the period 3,066 |
1,727 |
For a number of reasons, principally the eects of translation dierences, certain items in the statements of cash flows do not correspond to the dierences between the balance sheet amounts for the respective items.
in millions of euros
| common shares |
capital in excess of par value |
retained earnings |
revaluation reserve |
currency translation dierences |
available - for-sale financial assets |
cash flow hedges |
treasury shares at cost |
total share holders' equity |
non controlling interests |
total equity |
|
|---|---|---|---|---|---|---|---|---|---|---|---|
| January-March 2014 | |||||||||||
| Balance as of December 31, 2013 |
188 | 1,796 | 10,415 | 23 | (569) | 55 | 24 | (718) | 11,214 | 13 | 11,227 |
| Net income | 138 | 138 | (1) | 137 | |||||||
| Other comprehensive income, net of tax |
(211) | (2) | (16) | (2) | (9) | (240) | (240) | ||||
| Total comprehensive income |
(73) | (2) | (16) | (2) | (9) | (102) | (1) | (103) | |||
| Movement non-controlling interest |
– | – | (2) | (2) | |||||||
| Purchase oftreasury shares | (178) | (178) | (178) | ||||||||
| Re-issuance of treasury shares |
(99) | (46) | 209 | 64 | 64 | ||||||
| Share-based compensation plans |
19 | 19 | 19 | ||||||||
| Income tax share-based compensation plans |
(2) | (2) | (2) | ||||||||
| Total other equity movements |
(82) | (46) | 31 | (97) | (2) | (99) | |||||
| Balance as of March 30, 2014 |
188 | 1,714 | 10,296 | 21 | (585) | 53 | 15 | (687) | 11,015 | 10 | 11,025 |
| January to March | ||||||
|---|---|---|---|---|---|---|
| 2013 | 2014 | |||||
| sales | income from operations | sales | income from operations | |||
| as a % of sales | as a % of sales | |||||
| Healthcare | 2,127 | 176 | 8.3 | 1,966 | 109 | 5.5 |
| Consumer Lifestyle | 1,003 | 84 | 8.4 | 1,016 | 96 | 9.4 |
| Lighting | 1,975 | 110 | 5.6 | 1,892 | 108 | 5.7 |
| Innovation, Group & Services | 153 | (65) | – | 146 | (87) | – |
| Philips Group | 5,258 | 305 | 5.8 | 5,020 | 226 | 4.5 |
| sales | total assets | total liabilities excluding debt | |||||
|---|---|---|---|---|---|---|---|
| January to March | March 31, March 30, |
March 31, | March 30, | ||||
| 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | ||
| Healthcare | 2,127 | 1,966 | 11,371 | 10,512 | 3,395 | 2,983 | |
| Consumer Lifestyle | 1,003 | 1,016 | 2,837 | 2,830 | 1,745 | 1,509 | |
| Lighting | 1,975 | 1,892 | 7,163 | 6,719 | 2,478 | 2,215 | |
| Innovation, Group & Services | 153 | 146 | 6,908 | 5,374 | 3,530 | 4,206 | |
| 28,279 | 25,435 | 11,148 | 10,913 | ||||
| Assets and liabilities classified as held for | |||||||
| sale | 447 | 539 | 283 | 319 | |||
| Philips Group | 5,258 | 5,020 | 28,726 | 25,974 | 11,431 | 11,232 |
| sales | tangible and intangible assets1) | |||
|---|---|---|---|---|
| January to March | March 31, | March 30, | ||
| 2013 | 2014 | 2013 | 2014 | |
| Netherlands | 146 | 138 | 874 | 895 |
| United States | 1,506 | 1,404 | 8,135 | 7,305 |
| China | 607 | 639 | 1,141 | 1,043 |
| Germany | 310 | 306 | 274 | 285 |
| Japan | 307 | 270 | 495 | 410 |
| France | 213 | 198 | 88 | 77 |
| United Kingdom | 170 | 162 | 578 | 569 |
| Other countries | 1,999 | 1,903 | 2,112 | 1,798 |
| Philips Group | 5,258 | 5,020 | 13,697 | 12,382 |
1) Includes property, plant and equipment, goodwill, and intangible assets excluding goodwill
| January to March | ||||||
|---|---|---|---|---|---|---|
| 2013 | 2014 | |||||
| Netherlands | other | total | Netherlands | other | total | |
| Defined-benefit plans | ||||||
| Pensions | ||||||
| Current service cost | 48 | 20 | 68 | 45 | 18 | 63 |
| Interest expense | − | 16 | 16 | − | 14 | 14 |
| Interest income | (1) | − | (1) | (4) | − | (4) |
| Total | 47 | 36 | 83 | 41 | 32 | 73 |
| of which discontinued operations | 1 | − | 1 | − | − | − |
| Retiree Medical | ||||||
| Current service cost | – | 1 | 1 | – | – | – |
| Interest expense | − | 3 | 3 | − | 3 | 3 |
| Total | − | 4 | 4 | − | 3 | 3 |
| Defined-contribution plans | ||||||
| Cost | 2 | 40 | 42 | 2 | 37 | 39 |
| 1st quarter | |||
|---|---|---|---|
| 2013 | 2014 | ||
| Contributions and benefits paid by the Company | (198) | (478) |
Certain non-GAAP financial measures are presented when discussing the Philips Group's performance. In the following tables, a reconciliation to the most directly comparable IFRS performance measure is made.
| in % | ||||||||
|---|---|---|---|---|---|---|---|---|
| January to March | ||||||||
| comparable growth | currency eects | consolidation changes | nominal growth | |||||
| 2014 versus 2013 | ||||||||
| Healthcare | (2.1) | (5.0) | (0.5) | (7.6) | ||||
| Consumer Lifestyle | 6.5 | (5.2) | 0.0 | 1.3 | ||||
| Lighting | 0.4 | (4.6) | 0.0 | (4.2) | ||||
| Innovation, Group & Services | (10.4) | (0.5) | 6.3 | (4.6) | ||||
| Philips Group | 0.2 | (4.7) | 0.0 | (4.5) |
| January to March | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Income from operations (or EBIT) |
Amortization of intangibles |
Impairment of goodwill |
EBITA (or Adjusted income from operations) |
||||||
| 2014 | |||||||||
| Healthcare | 109 | (42) | (1) | 152 | |||||
| Consumer Lifestyle | 96 | (12) | − | 108 | |||||
| Lighting | 108 | (28) | (2) | 138 | |||||
| Innovation, Group & Services | (87) | (3) | − | (84) | |||||
| Philips Group | 226 | (85) | (3) | 314 | |||||
| 2013 | |||||||||
| Healthcare | 176 | (46) | − | 222 | |||||
| Consumer Lifestyle | 84 | (14) | − | 98 | |||||
| Lighting | 110 | (37) | − | 147 | |||||
| Innovation, Group & Services | (65) | − | − | (65) | |||||
| Philips Group | 305 | (97) | − | 402 | |||||
1) Excluding amortization of software and product development
in millions of euros
Net operating capital to total assets
| Consumer | |||||
|---|---|---|---|---|---|
| Philips Group | Healthcare | Lifestyle | Lighting | IG&S | |
| March 30, 2014 | |||||
| Net operating capital (NOC) | 10,381 | 7,443 | 1,321 | 4,484 | (2,867) |
| Exclude liabilities comprised in NOC: | |||||
| - payables/liabilities | 8,338 | 2,551 | 1,251 | 1,671 | 2,865 |
| - intercompany accounts | − | 137 | 72 | 101 | (310) |
| - provisions | 2,520 | 295 | 186 | 443 | 1,596 |
| Include assets not comprised in NOC: | |||||
| - investments in associates | 182 | 86 | − | 20 | 76 |
| - other current financial assets | 11 | − | − | − | 11 |
| - other non-current financial assets | 487 | − | − | − | 487 |
| - deferred tax assets | 1,789 | − | − | − | 1,789 |
| - cash and cash equivalents | 1,727 | − | − | − | 1,727 |
| 25,435 | 10,512 | 2,830 | 6,719 | 5,374 | |
| Assets classified as held for sale | 539 | ||||
| Total assets | 25,974 | ||||
| March 31, 2013 | |||||
| Net operating capital (NOC) | 9,969 | 7,888 | 1,092 | 4,664 | (3,675) |
| Exclude liabilities comprised in NOC: | |||||
| - payables/liabilities | 9,740 | 2,916 | 1,424 | 1,780 | 3,620 |
| - intercompany accounts | − | 149 | 79 | 144 | (372) |
| - provisions | 2,825 | 330 | 242 | 554 | 1,699 |
| Include assets not comprised in NOC: | |||||
| - investments in associates | 176 | 88 | − | 21 | 67 |
| - other current financial assets | 1 | − | − | − | 1 |
| - other non-current financial assets | 571 | − | − | − | 571 |
| - deferred tax assets | 1,931 | − | − | − | 1,931 |
| - cash and cash equivalents | 3,066 | − | − | − | 3,066 |
| 28,279 | 11,371 | 2,837 | 7,163 | 6,908 | |
| Assets classified as held for sale | 447 | ||||
| Total assets | 28,726 | ||||
Composition of net debt to group equity
| March 31, | March 30, | |
|---|---|---|
| 2013 | 2014 | |
| Long-term debt | 3,560 | 3,311 |
| Short-term debt | 1,042 | 406 |
| Total debt | 4,602 | 3,717 |
| Cash and cash equivalents | 3,066 | 1,727 |
| Net debt (total debt less cash and cash equivalents) | 1,536 | 1,990 |
| Shareholders' equity | 11,160 | 11,015 |
| Non-controlling interests | 37 | 10 |
| Group equity | 11,197 | 11,025 |
| Net debt and group equity | 12,733 | 13,015 |
| Net debt divided by net debt and group equity (in %) | 12 | 15 |
| Group equity divided by net debt and group equity (in %) | 88 | 85 |
| 1st quarter | |
|---|---|
| 2013 | 2014 |
| Cash flows used for operating activities (228) |
(172) |
| Cash flows used for investing activities (284) |
(191) |
| (512) Cash flows before financing activities |
(363) |
| Cash flows used for operating activities (228) |
(172) |
| Net capital expenditures: (203) |
(173) |
| Purchase of intangible assets (2) |
(11) |
| Expenditures on development assets (80) |
(74) |
| Capital expenditures on property, plant and equipment (124) |
(93) |
| Proceeds from sale of property, plant and equipment 3 |
5 |
| Free cash flows (431) |
(345) |
http://www.philips.com/investorrelations © 2014 Koninklijke Philips N.V.All rights reserved.
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