Philips sets 5-year target to survive Covid

We are well-positioned for a higher growth even though we have to kind of navigate the short term disparities in the market, says CEO

AMSTERDAM • Royal Philips NV said the lingering impact from the coronavirus and changes in the way healthcare is delivered will help boost sales of its medical gear for years to come.

The Dutch maker of body scanners and monitors yesterday set out a target for average annual sales growth of 5% to 6% from 2021 to 2025. Growth will be “modest” this year, and in the low single digits in 2021 based on the current solid orderbook, Philips said.

During the height of the pandemic, Philips struggled to keep up with orders for its ventilators used to help Covid-19 patients with severe breathing difficulties. The company now expects to benefit from a fundamental shift in how patients receive care through remote monitoring and virtual appointments.

“We take a longer view and think we are well-positioned for a higher growth even though we have to kind of navigate the short term disparities in the market,” CEO Frans van Houten said in a Bloomberg interview.

Providing a longer-term outlook, including improved margins, sets Philips apart from a swathe of manufacturers still unable to set mid-term goals. Shares of the Amsterdam-based company jumped 2.9% to €42.70 as of 11:13am local time yesterday.

While the focus remains on acute pandemic care, hospitals are now pushing ahead with surgery and other medical procedures that were put on hold. Even with increased national debt loads, governments will need to increase spending on healthcare having seen resources stretched, van Houten said.

Philips reported a 32% jump in Ebita to €769 million (RM3.85 billion) in the third quarter. That beat an average estimate of €630.6 million.

Philips invested more than €100 million on quadrupling ventilator production in just five months. A US$400 million (RM1.64 billion) emergency order from the US backfired when the state unexpectedly cancelled the purchase. Philips booked a €57 million provision to cover the lost contract as it seeks to find buyers for the excess stock in Africa. — Bloomberg