Outlook for healthcare business bolsters Philips

Strong orders for its healthcare business helped to boost shares in Dutch firm Philips.

The company is seeking to focus on scanners and medical technology and shed its traditional lighting operations.

Philips chief executive Frans van Houten said he expected modest growth in sales and earnings in 2016, with improvements mostly coming in the second half of the year.

The company saw an increase in sales in China, its biggest growth market, although Mr Van Houten could not say whether he expected the trend to continue as the economy there slows.

“It’s certainly gratifying to see the rebound, both in orders and sales growth, especially on the healthcare side, but it comes after several quarters of slow growth,” Mr van Houten told reporters.

“I don’t think we can declare that the (China) slowdown is over after one quarter.”

Mr Van Houten said the company remained on course to sell or float its lighting division in the first half of this year.

Last week the US blocked Philips’ plan to sell an 80 per cent stake in its Lumileds lighting components division to Chinese investors for $2.7 billion.

Mr Van Houten said that division will now likely be sold for a lesser amount in the second half of 2016.

The breakdown of the Lumileds deal left Philips under pressure as it tries to carry out several strategic operations at once.

It has been attempting to spin off its lighting and lighting components businesses since 2014 to focus on its core businesses of medical scanners and healthcare technology.

Results “were as good as we’ve seen in a long time,” Barclays analysts said in a note.

“Comparable intake in Healthcare reached 15 per cent, by far the highest of the big three,” they said, referring to Philips and its main competitors GE, and Siemens.

Barclays has a ‘neutral’ rating on Philips shares.

Reuters