Koninklijke Philips N.V (NYSE:PHG) Q2 2015 Earnings Conference Call - Preliminary Transcript

Jul 27, 2015 • 04:00 am ET

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Koninklijke Philips N.V (NYSE:PHG) Q2 2015 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Operator Welcome to the Royal Philips Second Quarter 2015 Results Conference Call on Monday, the 27th of July, 2015. During the introduction hosted by 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 by webcast on the website of Royal Philips. I will now hand the conference over to Mr. Robin Jansen, Head of Investor Relations. Please go ahead, sir.

Executive
Robin Jansen

Thank you, operator, and good morning, ladies and gentlemen. Welcome to Philips second quarter conference call. I'm here with Frans van Houten, CEO and Ron Wirahadiraksa, CFO. In a moment, Frans will make his opening remarks and will take you through our main strategic and financial highlights for the period. Ron will then provide more details on the financial performance during the quarter. After that, both Frans and Ron will be happy to take your questions.

Our press release and the related information slide deck were published at 7:00 AM CET this morning. Both documents are now available for download from our Investor Relations website. A full transcript of this conference call will be made available by tomorrow on our Investor Relations website. Before I turn over the call to Frans, I would like to remind you of two things. Following the decision in June 2014 to combine our Lumileds and Automotive Lighting businesses into a stand-alone company, the profit and loss of these combined businesses is now reported under discontinued operations.

And the net assets for the business in the balance sheet on the line assets held for sale. The cash flow of the combined Lumileds/Automotive businesses is reported under cash flow from discontinued operations. Therefore, all commentary that will follow in terms of sales and earnings at both the group level as well as the Lighting sector level excludes the performance related to the Lumileds and Automotive Lighting businesses. Secondly, when we refer to adjusted EBITA on this call, this represents EBITA excluding restructuring costs, acquisition-related charges and other charges and gains above 20 million. With that, I would like to hand over the call to Frans.

Executive
Francois A. van Houten

Thanks, Robin, and good morning, to everybody on the call. Our second quarter results were driven by strong comparable sales growth in Healthcare and adjusted EBITA margin improvements in all three sectors, most notably Consumer Lifestyle and Lighting. While we are pleased with the continued improvement in our operational performance and our results in the United States, Central and Eastern Europe and India in particular, we remain cautious about the global macroeconomic environment, especially in China, Russia and Latin America.

With that backdrop, I will provide more detail on our performance in each sector, our Accelerate! program and the separation progress. In Healthcare, comparable sales grew 8% year-on-year and operational profitability improved, with North America making a significant contribution. We continue to increase order fulfillment out of our Cleveland facility and