Royal Philips NV ADR PHG
Q1 2013 Earnings Call Transcript

Transcript Call Date 04/22/2013

Operator: Welcome to the Royal Philips Electronics First Quarter Results 2013 Conference Call on Monday 22nd of April, 2013. During the introduction hosted my Mr. Frans van Houten, CEO, and Mr. Ron Wirahadiraksa, CFO, all participants will be in a listen-only mode. After the introduction, there will be an opportunity to ask questions. Please note that this call will be recorded and is available via webcast on the website of Royal Philips Electronics.

I want to hand the conference over to Mr. Abhijit Bhattacharya, Head of Investor Relations. Please go ahead, sir.

Abhijit Bhattacharya - Head of IR: Good morning, ladies and gentlemen. Welcome to this conference call on the results for the first quarter of 2013 for Royal Philips Electronics. I'm here with Frans van Houten, our CEO and our CFO, Ron Wirahadiraksa.

In a moment, Frans will make his opening remarks and give you an update on the progress we have made during the quarter. Ron will shed more light on the details of the financial performance during the quarter. After this, both Frans and Ron will be happy to take your questions.

As usual, our press release and the accompanying information slide deck were published at 7.00 a.m. CET this morning. Both documents are now available for download from our Investor Relations' website. We will also make available a full transcript of this conference call on the Investor Relations website by tomorrow.

With that, let me hand over the call to Frans.

Frans van Houten - CEO: Thanks, Abhijit. Welcome and thank you all for joining us today in this call. The first quarter of 2013 was another quarter of good progress for Philips, as we achieved a 31% improvement in our operational results compared to last year.

What is particularly pleasing is that all sectors achieved a year-on-year improvement in operational results, clearly demonstrating the positive impact that the Accelerate! program is having on our company.

The initiatives to structurally lower our cost base and improve productivity by removing layers of the management and reducing complexity have had a positive impact on the results for the quarter. Our increased focus on a faster time to market for new product introductions to improve price realization and reduce bill of materials has improved operational gross margin for the Group by 180 basis points compared to a year ago. These structural improvements have enabled us to deliver better operating results in the first quarter despite the economic challenges that have led to a modest top line growth of 1%.

On that note and as we mentioned previously, the developments in the global economy and the impact on our order book clearly indicated to us that we would have a slow start to 2013. After a year of good growth in 2012, Healthcare sales in the first quarter were lower than the corresponding period of last year by a percentage point. Uncertainty, primarily in North America coupled with austerity measures in Europe resulted in a mid-single-digit decline in order intake in the quarter.

Solid execution of our growth plan in Consumer Lifestyle, however, enabled us to deliver double-digit growth in the quarter with Domestic Appliances delivering the highest growth in the sector.

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