(Reuters) – Royal Philips (NYSE:PHG), the healthcare equipment and services company, said it expects 4-6% sales growth and a 1% improvement in margins annually over the next few years.
The mid-term guidance is the first issued by the Dutch company since it spun off its lighting division in May, completing a decade-long transformation from an industrial and consumer products giant to a self-styled “HealthTech” company.
“The businesses in our HealthTech portfolio are strong and have the right fundamentals for sustained profitable growth”, said CEO Frans van Houten ahead of a meeting with analysts and investors in London.
Analysts for Barclays said the targets were “broadly in line” with their expectations.
“We believe the margin target may be modestly below somewhat elevated expectations, but at the same time see enough in these new targets to satisfy the bulls on the name”, they said in a note.
Barclays has a Neutral/Equal Weight rating on Philips.
Last month, Philips reported third quarter earnings that showed comparable sales up 2% to 5.90 billion euros, and adjusted earnings before interest, taxes and amortization (EBITA) of 649 million euros ($705 million), with a margin of 11%..
Philips said Friday its EBITA margin would rise gradually to the mid-teens; it also forecast annual free cash flow generation of 1-1.5 billion euros.
Philips now has three main divisions: personal health products, which include sleep masks as well as toothbrushes and shavers; diagnostic products, including high-end medical scanners and equipment; and “connected care”, a division that collaborates with hospitals to offer software and services on a large scale to help improve their performance.
Philips intends to gradually sell its entire 71.2% stake in Philips Lighting.
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