July 29, 2024 Second-quarter highlights
- Group sales amounted to EUR 4.5 billion, with comparable sales
growth of 2%
- Comparable order intake increased by 9%
- Income from operations EUR 816 million, including EUR 538
million insurance income*)
- Adjusted EBITA margin increased to 11.1% of sales
- Operating cash inflow of EUR 89 million, with a free cash
outflow of EUR 64 million
Roy Jakobs, CEO of Royal Philips:“I am
encouraged by our return to order intake growth this quarter,
primarily driven by North America. Within a challenging macro
environment we achieved strong margin improvement, supported by our
productivity program, solid operational cashflow due to improved
working capital management and comparable sales growth in line with
our plan.
Performance improvement was driven by progress on our execution
priorities and industry-leading innovations. These included
FDA-cleared AI tools within our next-generation cardiovascular
ultrasound platform to increase automation and productivity.
We continue to focus on enhancing execution, improving
end-to-end supply chain resilience and increasing agility and
productivity through simplifying our operating model. Patient
safety and quality remains our number one priority.”
Group and segment performance Group comparable
sales increased 2%, on the back of strong growth in Q2 2023. Growth
in mature and growth geographies was partly offset by the decline
in China. Comparable order intake grew 9% in the quarter and 3% in
the first half of 2024, reflecting quarterly unevenness in the
order-intake pattern. China remains a fundamentally attractive
growth market with strong underlying demand while the government’s
anti-corruption measures continued to impact short-term hospital
order lead times.
Adjusted EBITA margin for the group increased to 11.1% compared
with 10.1% in Q2 2023, with improvement across all businesses. Free
cash outflow was EUR 64 million and included payments of EUR 415
million in connection with the Respironics economic loss settlement
in the US, partly offset by initial receipt from insurers of EUR
150 million.
In the quarter S&P Global Ratings and Moody’s Ratings
upgraded their credit ratings outlook for Philips to stable.
Philips now has stable outlooks for its strong credit ratings
across all main global credit rating agencies. The relevant reports
and additional credit ratings information can be found here.
Diagnosis & Treatment comparable sales
increased 4%, on the back of double-digit growth in Q2 2023, with
growth across Image Guided Therapy and Precision Diagnosis.
Adjusted EBITA margin improved to 12.2%, mainly driven by improved
sales, pricing and productivity measures.
Connected Care comparable sales increased 2%,
driven by strong growth in Enterprise Informatics, while Monitoring
comparable sales growth was flat on the back of strong double-digit
growth in Q2 2023. Adjusted EBITA margin improved to 8.8%, mainly
driven by productivity measures and pricing.
Personal Health comparable sales increased 2%
globally, driven by sales growth outside of China. Adjusted EBITA
margin improved to 16.9%, mainly driven by operational improvements
and productivity measures. Productivity
Total productivity savings of EUR 195 million in the quarter:
operating model savings of EUR 57 million, procurement savings of
EUR 71 million, and other programs' savings of EUR 67 million.
Outlook Philips reiterates its confidence in
delivering the 2025 plan, acknowledging that uncertainties remain.
For the full year 2024, Philips continues to expect 3-5% comparable
sales growth, an Adjusted EBITA margin of 11-11.5%, and free cash
flow of EUR 0.9-1.1 billion.
The outlook excludes the potential impact of the ongoing Philips
Respironics-related legal proceedings, including the investigation
by the US Department of Justice.
Customer, innovation and ESG highlights
- Philips signed multi-year partnerships for monitoring and
image-guided therapy with several university hospitals in the
Netherlands and will provide patient monitors for the new Grand
Hôpital de Charleroi in Belgium, as well as roll out its ePatch and
AI-driven analytics platform across 14 hospitals in Spain.
- Philips secured customer wins in the US including a major
multi-year strategic partnership with Bon Secours Mercy Health, one
of the country’s largest health systems, standardizing innovative
patient monitoring solutions across its 49 hospitals, driving
better patient outcomes and reducing burdens on staff.
- Reinforcing its #1 global position in cardiovascular
ultrasound, Philips is launching its next-generation AI-enabled
cardiovascular ultrasound platform with new FDA-cleared AI tools
integrated into the company’s EPIQ CVx and Affiniti CVx ultrasound
system to advance cardiovascular imaging and increase automation
and productivity.
- Demonstrating its innovation leadership in minimally invasive
treatments, Philips announced the first implant of the Duo Venous
Stent System following pre-market approval from the US FDA. The
system’s flexible design allows clinicians to better treat patients
with deep venous disease.
- Philips unveiled a series of consumer health innovations in the
Greater China market, meeting key consumer needs across the region.
This includes the launch of the first medical-grade Philips Lumea
8000 Series IPL hair removal device with cooling technology, the
limited-edition Transformers-themed 5000, 7000 and 9000 series
shavers, and the new Sonicare 5300 power toothbrush.
- S&P recognized Philips as a leader in ESG as one of the
first ‘Light green’ scores in their newly launched Climate
Transition Assessment. Philips was also included in the ‘FTSE4Good’
ESG index, and NGO Health Care Without Harm confirmed that Philips
meets its Climate Excellence Standard for Health Care
Suppliers.
- Philips won 43 Red Dot design awards, including special
recognition for LumiGuide, the company’s 3D medical device guidance
solution that’s paving the way for radiation-free minimally
invasive surgery.
Capital allocation In the second quarter,
Philips completed the EUR 1.5 billion share repurchase program for
capital reduction purposes that was announced on July 26, 2021, and
canceled the 4,437,164 shares acquired this year. Philips also
distributed a dividend of EUR 0.85 per common share in the form of
shares only, resulting in the issuance of 30,860,582 new common
shares. Following the distribution of dividend and the cancellation
of shares, the total number of issued shares amounts to 939,939,384
common shares. More information is available via this link. *)
Related to Respironics product liability claim.
Click here to view the release online
For further information, please contact:
Elco van Groningen Philips External Relations
Tel.: +31 6 8103 9584 E-mail: elco.van.groningen@philips.com
Ben Zwirs Philips External Relations Tel.: +31 6
1521 3446 E-mail: ben.zwirs@philips.com Dorin Danu
Philips Investor Relations Tel.: +31 20 59 77055 E-mail:
dorin.danu@philips.com About Royal Philips Royal
Philips (NYSE: PHG, AEX: PHIA) is a leading health technology
company focused on improving people's health and well-being through
meaningful innovation. Philips’ patient- and people-centric
innovation leverages advanced technology and deep clinical and
consumer insights to deliver personal health solutions for
consumers and professional health solutions for healthcare
providers and their patients in the hospital and the home.
Headquartered in the Netherlands, the company is a leader in
diagnostic imaging, ultrasound, image-guided therapy, monitoring
and enterprise informatics, as well as in personal health. Philips
generated 2023 sales of EUR 18.2 billion and employs approximately
68,700 employees with sales and services in more than 100
countries. News about Philips can be found at
www.philips.com/newscenter.
Forward-looking statements and other important
information Forward-looking statements This document and
the related oral presentation, including responses to questions
following the presentation, contain certain forward-looking
statements with respect to the financial condition, results of
operations and business of Philips and certain of the plans and
objectives of Philips with respect to these items. Examples of
forward-looking statements include statements made about strategy,
estimates of sales growth, future Adjusted EBITA*), future
restructuring and acquisition related charges and other costs,
future developments in Philips’ organic business and the completion
of acquisitions and divestments. Forward-looking statements can be
identified generally as those containing words such as
“anticipates”, “assumes”, “believes”, “estimates”, “expects”,
“should”, “will”, “will likely result”, “forecast”, “outlook”,
“projects”, “may” or similar expressions. By their nature, these
statements involve risk and uncertainty because they relate to
future events and circumstances and there are many factors that
could cause actual results and developments to differ materially
from those expressed or implied by these statements. These factors
include but are not limited to: Philips’ ability to gain leadership
in health informatics in response to developments in the health
technology industry; Philips’ ability to keep pace with the
changing health technology environment; macroeconomic and
geopolitical changes; integration of acquisitions and their
delivery on business plans and value creation expectations;
securing and maintaining Philips’ intellectual property rights, and
unauthorized use of third-party intellectual property rights;
Philips’ ability to meet expectations with respect to ESG-related
matters; failure of products and services to meet quality or
security standards, adversely affecting patient safety and customer
operations; breaches of cybersecurity; challenges in simplifying
our organization and our ways of working; the resilience of our
supply chain; attracting and retaining personnel; challenges in
driving operational excellence and speed in bringing innovations to
market; compliance with regulations and standards including
quality, product safety and (cyber) security; compliance with
business conduct rules and regulations including privacy and
upcoming ESG disclosure and due diligence requirements; treasury
and financing risks; tax risks; reliability of internal controls,
financial reporting and management process; and global inflation.
As a result, Philips’ actual future results may differ materially
from the plans, goals and expectations set forth in such
forward-looking statements. For a discussion of factors that could
cause future results to differ from such forward-looking
statements, see also the Risk management chapter included in the
Annual Report 2023. Reference is also made to section Risk
management in the Philips semi-annual report 2024.
Third-party market share data Statements regarding
market share contained in this document, including those regarding
Philips’ competitive position, are based on outside sources such as
specialized research institutes, as well as industry and dealer
panels, in combination with management estimates. Where information
is not yet available to Philips, market share statements may also
be based on estimates and projections prepared by management and/or
based on outside sources of information. Management’s estimates of
rankings are based on order intake or sales, depending on the
business. Market Abuse Regulation This press
release contains inside information within the meaning of Article
7(1) of the EU Market Abuse Regulation. Use of non-IFRS
information In presenting and discussing the Philips
Group’s financial position, operating results and cash flows,
management uses certain non-IFRS financial measures. These non-IFRS
financial measures should not be viewed in isolation as
alternatives to the equivalent IFRS measure and should be used in
conjunction with the most directly comparable IFRS measures.
Non-IFRS financial measures do not have standardized meaning under
IFRS and therefore may not be comparable to similar measures
presented by other issuers. A reconciliation of these non-IFRS
measures to the most directly comparable IFRS measures is contained
in this document. Further information on non-IFRS measures can be
found in the Annual Report 2023. Presentation All
amounts are in millions of euros unless otherwise stated. Due to
rounding, amounts may not add up precisely to totals provided. All
reported data is unaudited. Financial reporting is in accordance
with the accounting policies as stated in the Annual Report 2023.
Prior-period amounts have been reclassified to conform to the
current-period presentation; this includes immaterial
organizational changes. Effective Q1 2024, Philips has revised the
order intake policy to reflect the full contract value for software
contracts that start generating revenue within an 18-month horizon,
instead of only the next 18-months-to-revenue horizon. This change
has been implemented to better align with the specific business
model of our software businesses, simplify the order intake
process, and better align with peers. Prior-period comparable order
intake percentages have been restated accordingly. This revision
has not resulted in any material changes to the order intake
percentages for the periods presented. Per share calculations have
been adjusted retrospectively for all periods presented to reflect
the issuance of shares in the second quarter of 2024 in connection
with the 2023 share dividend. *) Non-IFRS financial measure. Refer
to Reconciliation of non-IFRS information.
Koninklijke Philips NV (NYSE:PHG)
Historical Stock Chart
From Jan 2025 to Feb 2025
Koninklijke Philips NV (NYSE:PHG)
Historical Stock Chart
From Feb 2024 to Feb 2025
