PHIA Koninklijke Philips NV

By Ian Walker

Koninklijke Philips NV on Monday launched a 1.5 billion euro ($1.77 billion) share buyback program as it reported a fall in second-quarter net profit after booking a provision against a faulty component used in some sleep and respiratory-care products, as previously flagged.

The Dutch health-technology company made a net profit attributable to shareholders of EUR150 million for the quarter ended June 30, compared with EUR208 million for the same period last year. It booked a provision of EUR250 million.

Philips said in June that it would book the provision in its accounts and had started a recall notification for the U.S. in relation to certain sleep and respiratory-care devices. It said at the time that the company had identified potential health risks related to a sound-abatement foam component in certain devices. The majority of the affected devices are in the first-generation DreamStation sleep and respiratory-care product family, the company said.

The company said Monday that it was in talks with the relevant regulatory authorities to get approval to start deploying the repair kits and replacement devices that it is producing.

Quarterly sales rose to EUR4.23 billion from EUR3.97 billion, missing analysts' expectations for EUR4.19 billion taken from the company's website. On a comparable basis, sales grew 9%, beating a company-provided consensus estimate of 7.3%.

Adjusted Ebita--a metric that strips out exceptional and other one-off items--was EUR532 million, compared with EUR390 million a year earlier and a company-compiled consensus of EUR519 million, Philips said.

The company said comparable order intake fell 15% with strong double-digit growth in the diagnosis & treatment businesses and a fall in the connected care businesses which was mainly due to the Covid-19 related growth in the second quarter of 2020.

Free cash flow in the quarter was EUR167 million compared with EUR212 million for the same period last year.

Philips backed its full-year guidance, expecting to deliver low-to-mid-single-digit comparable sales growth for 2021. The company also said it expects to report adjusted earnings before interest, taxes and amortization margin improvement of 60 basis points.

Shares at 0804 GMT were down 87 European cents, or 2.1%, at EUR39.92.

Write to Ian Walker at ian.walker@wsj.com

(END) Dow Jones Newswires

July 26, 2021 04:34 ET (08:34 GMT)

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