Philips delivers Q1 sales of EUR 3.8 billion, with 9% comparable
sales growth; net income amounts to EUR 40 million and Adjusted
EBITA margin improves 390 basis points to 9.5%
April 26, 2021First-quarter highlights
- Following the agreement to sell the Domestic Appliances
business to global investment firm Hillhouse Capital, this business
is reported as a discontinued operation as of Q1 2021.
Consequently, sales and results from the Domestic Appliances
business are no longer included in the results of continuing
- Group sales amounted to EUR 3.8 billion, with 9% comparable
- Comparable order intake decreased 5%, with double-digit growth
in the Diagnosis & Treatment businesses and a double-digit
decline in the Connected Care businesses on the back of 80% growth
in Q1 2020
- Income from continuing operations was a loss of EUR 34 million.
Excluding the impact of a provision related to precautionary
actions to address a component quality issue, income from
continuing operations improved by EUR 139 million year-on-year.
Income from continuing operations was EUR 17 million in Q1
- Adjusted EBITA increased to EUR 362 million, or 9.5% of sales,
compared to EUR 208 million, or 5.6% of sales in Q1 2020
- Operating cash flow improved to EUR 321 million, compared to
EUR 181 million in Q1 2020
- Free cash flow was EUR 169 million, compared to an outflow of
EUR 15 million in Q1 2020
Frans van Houten, CEO of Royal Philips:
“Despite the ongoing impact of COVID-19, our performance gained
momentum with a strong 9% comparable sales growth and profitability
improvement in the first quarter, with all business segments and
markets contributing. We are encouraged by the strong 11%
comparable order intake growth for the Diagnosis & Treatment
businesses, and the strengthening performance of the Personal
Health businesses. At the same time, the Connected Care businesses
continued to successfully convert their strong order book, while
comparable order intake decreased 27%, as anticipated following the
80% order intake growth for patient monitors and hospital
ventilators in Q1 2020.
Our growth momentum is driven by our portfolio of innovative
solutions, for example in the areas of precision diagnosis,
image-guided therapy, and telehealth. Moreover, we continued to add
long-term strategic partnerships with hospitals on the back of more
than 50 new partnerships we signed in 2020. This illustrates our
ability to meet the needs of today’s hospital leaders, across the
globe, as they plan for the future.
In line with our plans, we signed an agreement to sell the
Domestic Appliances business, which concludes our major
divestments. We are pleased that we have found a good home for this
business and we look forward to a successful partnership with the
new owner, Hillhouse Capital. We are also pleased to have completed
the acquisition of BioTelemetry and Capsule Technologies, which
will further drive our transformation into a solutions company, and
in particular further strengthen our position to improve patient
care across care settings for multiple diseases and medical
Regretfully, we have identified a quality issue in a component
that is used in certain sleep and respiratory care products, and
are initiating all precautionary actions to address this issue, for
which we have taken a EUR 250 million provision.
Looking ahead, while we continue to see uncertainty related to
the impact of COVID-19 across the world, we see increased demand in
the Diagnosis & Treatment and Personal Health businesses. We
now plan to deliver low-to-mid-single-digit comparable sales growth
for the Group in 2021 (compared to the earlier projection of
low-single-digit growth), with an Adjusted EBITA margin improvement
of 60-80 basis points."
Business segment performance
All business segments delivered comparable sales growth and
increased Adjusted EBITA margin in the quarter, driven by sales
growth and results of our productivity programs.
The Diagnosis & Treatment businesses recorded 9% comparable
sales growth, with double-digit growth in Diagnostic Imaging,
high-single-digit growth in Ultrasound, and mid-single-digit growth
in Image-Guided Therapy. Comparable order intake showed 11% growth,
driven by Diagnostic Imaging and Image-Guided Therapy. The Adjusted
EBITA margin increased to 8.7%.
Comparable sales in the Connected Care businesses increased 7%,
led by double-digit growth in Hospital Patient Monitoring.
Comparable order intake showed a 27% decrease, as anticipated
following the steep 80% increase in Q1 2020. The Adjusted EBITA
margin increased to 12.8%.
The Personal Health businesses recorded comparable sales growth
of 17%, with double-digit growth in Personal Care and
mid-single-digit growth in Oral Healthcare. The Adjusted EBITA
margin increased to 14.3%.
Philips’ ongoing focus on innovation and partnerships resulted
in the following key developments in the quarter:
- Philips signed multiple new long-term strategic partnerships in
North America, Europe and Asia, including a 5-year agreement with
Spanish healthcare group Vithas. Philips will provide Vithas with
diagnostic imaging systems combined with advanced informatics, and
image-guided therapy solutions, to enhance patient care.
- Strong traction for Philips’ diagnostic and therapeutic
catheter portfolio, which includes innovations such as Philips’
coronary and peripheral IVUS catheters, coupled with the resumption
of elective procedures, resulted in a return to double-digit growth
for the Image-Guided Therapy Devices business in the quarter.
- Philips received US FDA clearance for its SmartCT (Cone Beam
CT) application for the Azurion image-guided therapy system, which
provides interventionalists with CT-like 3D images to enhance
procedural outcomes and fits seamlessly into existing workflows. An
industry-first, Philips also introduced ClarifEye Augmented Reality
Surgical Navigation, advancing minimally invasive spine procedures
in the hybrid operating room.
- Philips expanded its Incisive CT platform with the launch of
the AI-enabled Precise Suite, delivering smart workflows from image
acquisition to reporting, with image reconstruction, automated
patient positioning, and real-time interventional guidance to drive
precision in dose, speed, and image quality.
- Philips produced its 100 millionth OneBlade, just 5 years after
its launch in 2016. The Philips OneBlade has disrupted shaving
markets worldwide, creating a new category for shaving, trimming,
and edging. Philips also introduced the Lumea IPL 9000 series with
SenseIQ technology for personalized hair removal, which is
available through a Try&Buy subscription model in Germany, the
Netherlands and other countries.
- Expanding its remote patient management offering, Philips
introduced the Medical Tablet, a portable monitoring kit designed
to help clinicians remotely monitor larger patient populations
during emergency situations. This new offering, which is available
in North America, Europe and Japan, provides remote access to
patient data to improve workflows and better manage increased
In the first quarter, procurement savings amounted to EUR 44
million. Overhead and other productivity programs delivered savings
of EUR 53 million.
Philips has determined from user reports and testing that there
are possible risks to users related to the sound abatement foam
used in certain of Philips' sleep and respiratory care devices
currently in use. The risks include that the foam may degrade under
certain circumstances, influenced by factors including use of
unapproved cleaning methods, such as ozone, and certain
environmental conditions involving high humidity and temperature.
The majority of the affected devices are in the first-generation
DreamStation product family. Philips’ recently launched
next-generation CPAP platform, DreamStation 2, is not affected.
Philips is in the process of engaging with the relevant regulatory
agencies regarding this matter and initiating appropriate actions
to mitigate these possible risks. Given the estimated scope of the
intended precautionary actions on the installed base, Philips has
taken a provision of EUR 250 million.
On March 25, 2021, Philips announced that it had signed an
agreement to sell its Domestic Appliances business. As of the first
quarter of 2021, the Domestic Appliances business (which was
previously part of the Personal Health segment) is reported as a
discontinued operation. Philips will continue to consolidate
Domestic Appliances under International Financial Reporting
Standards (IFRS) until the sale is completed. Further details of
the restatement have been published on the Philips Investor
Relations website and can be accessed here. The Personal Health
segment in this report is presented without the results of the
Domestic Appliances business.
 Potential Risks Associated With The Use of Ozone and
Ultraviolet (UV) Light Products for Cleaning CPAP Machines and
Accessories: FDA Safety Communication. Click here to view the
For further information, please contact: Steve
Klink Philips Global Press Office Tel: +31 6 1088 8824 Email:
firstname.lastname@example.org Martijn van der Starre Philips
Global Press Office Tel.: +31 6 2847 4617 E-mail:
email@example.com About Royal PhilipsRoyal
Philips (NYSE: PHG, AEX: PHIA) is a leading health technology
company focused on improving people's health and well-being, and
enabling better outcomes across the health continuum – from healthy
living and prevention, to diagnosis, treatment and home care.
Philips leverages advanced technology and deep clinical and
consumer insights to deliver integrated solutions. Headquartered in
the Netherlands, the company is a leader in diagnostic imaging,
image-guided therapy, patient monitoring and health informatics, as
well as in consumer health and home care. Philips generated 2020
sales of EUR 19.5 billion and employs approximately 77,000
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
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 our 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. 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: changes in
industry or market circumstances; economic, political and societal
changes; Philips’ increasing focus on health technology and
solutions; the successful completion of divestments such as the
disentanglement and divestment of our Domestic Appliances
businesses; the realization of Philips’ objectives in growth
geographies; business plans and integration of acquisitions;
securing and maintaining Philips’ intellectual property rights, and
unauthorized use of third-party intellectual property rights;
COVID-19 and other pandemics; breaches of cybersecurity; IT system
changes or failures; the effectiveness of our supply chain;
challenges to drive operational excellence, productivity and speed
in bringing innovations to market; attracting and retaining
personnel; future trade arrangements following Brexit; compliance
with regulations and standards including quality, product safety
and data privacy; compliance with business conduct rules and
regulations; treasury risks and other financial risks; tax risks;
costs of defined-benefit pension plans and other post- retirement
plans; reliability of internal controls, financial reporting and
management process. 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 2020.
Philips has taken a provision of EUR 250 million related to
precautionary actions to address a component quality issue, which
is Philips’ current best estimate for the expected related costs.
The actual amounts of the costs, are dependent on a number of
factors the outcome of which is uncertain, and, as a consequence,
the amount of the provision may change at a future date.
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,
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
Fair value information
In presenting the Philips Group’s financial position, fair
values are used for the measurement of various items in accordance
with the applicable accounting standards. These fair values are
based on market prices, where available, and are obtained from
sources that are deemed to be reliable. Readers are cautioned that
these values are subject to changes over time and are only valid at
the balance sheet date. When quoted prices or observable market
data are not readily available, fair values are estimated using
appropriate valuation models and unobservable inputs. Such fair
value estimates require management to make significant assumptions
with respect to future developments, which are inherently uncertain
and may therefore deviate from actual developments. Critical
assumptions used are disclosed in the Annual Report 2020. In
certain cases independent valuations are obtained to support
management’s determination of fair values.
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
In 2020, Philips revised the definition of net finance expenses
used in the calculation of Adjusted income from continuing
operations attributable to shareholders, to exclude fair value
movements of limited life fund investments recognized at fair value
through profit and loss. This change leads to more relevant
information as the fair value movements are not indicative of
Philips' performance. The fair value movements do not represent
cash items. Philips believes making this change is helpful for
investors to evaluate Philips' performance.
Per share and weighted average share calculations have been
adjusted for all periods presented to reflect the issuance of
shares for the share dividend in respect of 2019.
As announced on March 25, 2021, Philips has signed an agreement
to sell its Domestic Appliances business. As of the first quarter
of 2021, the Domestic Appliances business is presented as a
discontinued operation. In this report, comparative results have
been restated to reflect the treatment of the Domestic Appliances
business as a discontinued operation. Further details of the
restatement have been published on the Philips Investor Relations
website and can be accessed here.
Prior-period amounts have been reclassified to conform to the
current-period presentation; this includes immaterial
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