Philips on course to hit profitablty target as margins improve

Dutch healthcare company 2nd-quarter sales were up 3%, led by growth of 5% at its health technology businesses

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Dutch healthcare company Philips is on course to hit its 2016 profitability target despite concerns over Britain's vote to leave the European Union (EU) and political uncertainty in the United States (US), it said after reporting quarterly results on Monday.

The company's first results since spinning off the lower-margin Philips Lighting business, in which it still owns a 70% stake, hit consensus forecasts as higher volumes and tight cost control improved margins.

Second-quarter sales were up 3%, led by growth of 5% at its health technology businesses.

Chief Executive Frans van Houten said that a British exit from the EU could hit demand for healthcare equipment in the country and warned of uncertainty over US healthcare policy because of the presidential election.

"We all read the news and that gives us cause for concern," van Houten said, though he added that worries over China have receded somewhat.

Philips reported adjusted earnings before interest, tax and amortisation of 544 million euros ($597 million), slightly ahead of the 534 million euros forecast by analysts. Sales of 5.9 billion euros were in line with expectations.

The company's adjusted EBITA margin improved to 9.3%, against 6.8% in the first quarter.

Philips, which is targeting a margin of 11% for the full year, has said that margin improvements will be "backloaded" toward the second half of the year.

($1 = 0.9112 euros)