Philips presents its performance and value creation trajectory for the 2021-2025 period at its Capital Markets Day
November 06 2020 - 2:00AM
November 6, 2020
Amsterdam, the Netherlands – At the company’s
virtual Capital Markets Day with investors and financial analysts
today, Royal Philips (NYSE: PHG, AEX: PHIA), a global leader in
health technology, will provide further details of its strategic
plan and performance trajectory for the 2021–2025 period. Starting
at 13:00 CET / 12:00 GMT / 07:00 EST, Philips CEO Frans van Houten,
together with CFO Abhijit Bhattacharya and several executives, will
share deeper insights into the company’s path to value.
“We have transformed Philips into a global health technology
leader, applying our innovation strength to improve the health and
well-being of people,” said Frans van Houten, CEO of Royal Philips.
“The systems, smart devices, AI & software, and services we
develop help consumers improve their health and well-being, and
healthcare providers achieve better outcomes, higher productivity,
and improved patient and staff experiences. The transformation has
also led to a structurally improved growth and profitability
profile of the company. Looking ahead, we are excited to enter the
next growth phase guided by our strategic imperatives to better
serve customers and improve quality, boost growth in our core
businesses, and win with solutions.”
As previously reported, Philips’ targets for accelerated growth,
higher profitability and improved cash flow for the 2021–2025
period are [1]:
- An acceleration
of the average annual comparable sales growth to 5-6%, with all
business segments within this range. For 2021, Philips’ current
view is that Group comparable sales will deliver low-single-digit
growth, driven by solid growth in Diagnosis & Treatment and
Personal Health, partly offset by lower Connected Care sales;
- An Adjusted
EBITA margin improvement of 60-80 basis points on average annually,
starting in 2021 and reaching a high-teens Adjusted EBITA margin
for the Group by 2025 [2];
- A free cash flow
above EUR 2 billion by 2025;
- An organic
Return on Invested Capital (ROIC) of mid-to-high-teens by
2025.
“We plan to accelerate sales growth and improve the Adjusted EBITA
margin to high-teens by 2025,” said Abhijit Bhattacharya, CFO of
Royal Philips. “Our productivity initiatives will deliver
additional cumulative net savings of EUR 2 billion by 2025. A
strong cash conversion of over 90%, combined with the efficiency of
our balance sheet, will drive the planned free cash flow generation
of above EUR 2 billion by 2025. Overall, we have established a
robust financial framework that is geared to value creation, which
will enable us to deliver approximately 10% Adjusted Earnings per
Share growth annually.”
The new financial targets are underpinned by Philips’ three
strategic imperatives:
1. Further improving the customer experience and
operational excellence
For example:
- Expanding Philips’ global suite of healthcare services to help
its customers improve their clinical, operational, financial and
patient/staff experience results;
- Stepping up productivity programs targeting additional net
savings of EUR 400 million a year, for instance through procurement
and supply chain productivity programs.
2. Boosting growth in the core by innovating to
extend category leadership, geographic expansion, and deeper
customer partnerships
For example:
- Leveraging Philips’ innovations such as the Philips One power
toothbrush, Ingenia Ambition MR system for helium-free operations,
and IntelliVue remote patient monitoring systems MX750/MX850 to
extend category leadership;
- Enhancing the global market penetration of Philips’ informatics
propositions, such as the company’s cloud-based EMR and ICU
telehealth solutions;
- Expanding the long-term strategic consultative partnership
program to drive improved results for Philips’ customers.
3. Winning with solutions to support consumers with
their personal health, and to help professional healthcare
customers achieve the Quadruple Aim
For example:
- Scaling Philips’ integrated oral healthcare solution offering,
which comprises connected power toothbrushes, coaching apps, and
tele-dentistry services to support consumers in their daily
personal health routines, in collaboration with payers and
dentists;
- Driving minimally invasive procedure innovation in more
therapeutic areas with Philips image-guided therapy solutions to
deliver enhanced outcomes.
Philips’ Capital Markets Day will start today at 13:00 CET / 12:00
GMT / 07:00 EST. From this time onwards, please click on this link
to follow the webcast and download the presentations that will be
used during the day.
1) The new targets exclude the Domestic
Appliances business. As announced in January 2020, the Domestic
Appliances business is being separated from Philips, a process that
is expected to be completed in the third quarter of 2021.
2) The Diagnosis & Treatment business
segment is expected to reach 15-17% Adjusted EBITA margin, the
Connected Care segment is expected to reach 17-19%, and the
Personal Health business segment is expected to reach 19-20%.
For further information, please contact:
Ben Zwirs
Philips Global Press Office
Tel.: +31 6 15213446
E-mail: ben.zwirs@philips.com
Derya Guzel
Philips Investor Relations
Tel.: +31 20 5977055
E-mail: derya.guzel@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, 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 2019
sales of EUR 19.5 billion and employs approximately 81,000
employees with sales and services in more than 100 countries. News
about Philips can be found at www.philips.com/newscenter.
Forward-looking statements
This release contains 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 the strategy, estimates of
sales growth, future EBITA, 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.
This press release contains inside information within the meaning
of Article 7(1) of the EU Market Abuse Regulation.
Philips presents its performance and value creation
trajectory for the 2021-2025 period at its Capital Markets
Day
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