Earnings Call Excerpt
Koninklijke Philips Electronics NV (PHG)
Q1 2006 Earnings Conference Call
April 18th 2006, 4:30 AM EST.
Operator
Welcome to the Royal Philips Electronics Q1 results call on Tuesday 18 April 2006. The introduction is by Mr. Pierre-Jean Sivignon. All participants will be in a listen-only mode. After the presentation there will be an opportunity to ask questions. If any participant has difficulty hearing the presentation at any time, please press * followed by 0 on your telephone for operator assistance. Please note that this call will be recorded and is available by webcast on the website of Royal Philips Electronics. I will now hand the conference over to Mr. Pierre-Jean Sivignon. Please go ahead, sir.
Pierre-Jean Sivignon
Thank you. Ladies and gentlemen let me firstly welcome you to this conference call for the Q1 results of 2006 for Royal Philips Electronics. I will make a few introductory remarks and then open up to the call to answer your questions.
This quarter has again been one in which we have seen more evidence that the targets we have set for ourselves are being or will be met. Let me be more specific; the comparable growth for the company was 10%, with all main divisions contributing toward this figure. In fact, the lowest for any division was 8% growth. The growth in the quarter supports our average annual target of 5-6% growth on comparable terms. And I mean organic growth.
The EBIT margin in the quarter was 4.5% compared to 3.2% in 2005. This improvement QoverQ helps us move toward our target of 7-10% as from the end of 2006. Please remember that Q4 is always our strongest quarter.
In Medical Systems, the comparable growth was 8%, which supports our annual target of 6%. This was also underpinned by the 18% growth in equipment order intake which is a continuation of the strong trend that we saw last year. In addition, the order intake for Medical IT was excellent. The margin continues to be affected by the same factors that we saw in Q4 2005, however this in now way diminishes our expectation to return to higher margins within a few quarters, as we have identified the actions to be taken and these are in process.
In DAP the excellent quarter has given us a 10% comparable growth which supports our target of 7% for the year. As part of the high growth rate, we saw a continuation of the success of our new shaving range. The underlying development of the margin was strong, and supports our annual target of 15-16%. We continue to work toward taking costs out of this division.
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