Philips Electronics NV's shares fell by more than 6 percent during morning trading in Amsterdam and pre-market trading on the NYSE. This follows the Dutch consumer electronics company's report of a decrease in its fourth-quarter operational income due to sluggish sales. However, the company did achieve a net income, a significant improvement from the previous year's losses, mostly attributable to reduced tax expenses.
Philips also announced it will temporarily stop selling ventilators and sleep apnea breathing-assist machines in the United States, as part of a consent decree with the US Department of Justice (DOJ) on behalf of the US Food and Drug Administration.
Moreover, Philips plans to propose maintaining its dividend at 0.85 euros per share, to be distributed in shares at the 2024 Annual General Meeting of Shareholders.
Looking ahead, Philips anticipates a 3-5 percent comparable sales growth and an adjusted EBITA margin of 11-11.5 percent for 2024. The estimated costs related to remediation activities and disgorgement payments for Philips Respironics sales in the US will approximately constitute 100 basis points in 2024.
Relying on its plan for 2023-2025, Philips expects mid-single-digit comparable sales growth, low-teens adjusted EBITA margin, and a free cash flow of 1.4 to 1.6 billion euros. However, these projections exclude the ongoing Respironics field investigation and any impact of ongoing litigation.
According to Philips, it has laid off approximately 8,000 employees out of a planned total of 10,000 by the end of 2025.
The fourth quarter saw Philips making a net income of 38 million euros, a significant leap from the loss of 105 million euros last year. The income from operations, however, dropped to 24 million euros from the previous year's 171 million euros, including charges connected with the Respironics consent decree.
Overall, Group sales were 7 percent lower than last year, standing at 5.06 billion euros. On a comparable basis, sales were down by 1 percent. Philips' shares were trading at 19.70 euros in Amsterdam and around $21.19 in the NYSE pre-market activity, declining roughly 7 percent.
