February 19, 2025Full Year and Q4 Group performance
highlights
- Sales of EUR 18.0
billion in 2024, comparable sales growth 1%; EUR 5.0 billion in Q4,
comparable sales growth 1%, despite double-digit decline in
China
- Comparable order
intake increased 1% in 2024; up 2% in Q4, despite double-digit
decline in China
- Income from
operations was EUR 529 million in 2024; EUR 199 million in Q4
- Adjusted EBITA
margin increased 90 basis points to 11.5% of sales in 2024; up 60
basis points to 13.5% in Q4
- Net cash flow from
operating activities was EUR 1,569 million in 2024; EUR 1,459
million in Q4
- Free cash flow was
EUR 906 million in 2024; EUR 1,285 million in Q4
- Finalized Philips
Respironics recall-related medical monitoring and personal injury
settlements in US
- Proposed dividend
maintained at EUR 0.85 per share, in shares or cash
- Increased
productivity savings target for 2023-2025 from EUR 2 billion to EUR
2.5 billion, EUR 800 million in 2025
- Outlook for 2025
published
Roy Jakobs, CEO of Royal Philips:“We delivered better
care for more people by enhancing execution and focusing on driving
improvements in profitability and cash flow, as well as order and
sales growth. We strengthened our fundamentals and resolved
significant US litigation relating to the Respironics recall.
Despite double-digit declines in demand in both consumer and
health systems in China, we returned to positive order growth and
continued to drive margin expansion and cash-flow generation. With
our strong balance sheet we are pleased to offer shareholders the
option to receive the dividend in shares or cash.
Within a persistently challenging macro environment, our focus
remains on executing our value creation plan, bringing
industry-leading innovations to the market and driving a
simplified, more agile operating model. We strengthened our team
and culture of impact with care, with patient safety and quality as
our number one priority.
Looking ahead, we remain confident in our long-term plan and
will continue to work closely with customers as we build on our
strong innovation pipeline and focus on execution excellence to
drive profitable growth.”
Group and segment performance Comparable order intake
increased 2% in the quarter, with strong performance in the North
America and Growth geographies, partly offset by a double-digit
decline in demand in China. Group comparable sales increased 1% in
the quarter, with solid growth of 5% in the rest of the world,
largely offset by a double-digit decline in China, where market
conditions are expected to remain uncertain.
Adjusted EBITA increased 60 basis points to 13.5% in Q4, driven
by operational improvements and productivity measures. Free cash
flow increased to EUR 1.3 billion in the quarter, driven by
Respironics insurance proceeds, partly offset by phasing in working
capital.
For the full year, comparable order intake and sales increased
1%, up 4% excluding China. Adjusted EBITA increased 90 basis points
to 11.5% and free cash flow was EUR 0.9 billion.
Diagnosis & Treatment comparable sales decreased 1%
in Q4, due to a double-digit decline in China, offsetting solid
growth elsewhere. Adjusted EBITA margin was 12.1% in Q4, driven by
productivity, mix and pricing. For the full year, the Diagnosis
& Treatment businesses recorded 1% comparable sales growth, on
the back of 11% growth in 2023, and an Adjusted EBITA margin of
11.6%.
Connected Care comparable sales increased 7% in Q4, on
the back of a low comparison base. Adjusted EBITA margin was 15.0%
in Q4, in line with last year. For the full year, the Connected
Care businesses recorded a 2% comparable sales increase and an
Adjusted EBITA margin of 9.6%.
Personal Health comparable sales decreased 2% in Q4 due
to a double-digit decline in China, more than offsetting a strong
performance elsewhere. Adjusted EBITA margin was 18.0% in Q4,
including lower sales in China. For the full year, Personal Health
comparable sales decreased 1% and the Adjusted EBITA margin was
16.7%. Innovation highlights
- FDA clearance of the
Philips CT 5300, featuring AI-based reconstruction software to
reduce radiation dose and improve image quality, and of the Philips
Spectral CT 7500 RT, enabling personalized radiation therapy
planning.
- Expansion of
Philips' strategic collaboration with Amazon Web Services to offer
an integrated diagnostics portfolio in the cloud, such as AI
advanced visualization solutions that unify diagnostic workflows,
improve access to critical insights, and drive better outcomes
across clinical specialties, including radiology, digital pathology
and cardiology.
- Philips and Mayo
Clinic will collaborate using their proprietary AI technologies to
target breakthroughs in ease-of-use and efficiency to bring high-
quality diagnostic MRI and better care to patients with heart
disease. Philips also announced partnerships with Hôpital Fondation
Rothschild in Paris for imaging platforms and health informatics
and with Erasmus Medical Center in Rotterdam for ultrasound
solutions and services.
- Together with its
clinical partners, Philips continues to advance minimally invasive
procedures to treat patients based on new technologies and methods,
enrolling the first patients in the THOR clinical trial, which
integrates two critical peripheral artery disease treatments into a
single device. Achieving a significant milestone in the WE-TRUST
clinical trial, Philips has now included one-third of the targeted
564 patients to evaluate how a new imaging method could impact
workflow and improve outcomes for stroke patients.
- Philips renewed its
mid-range Sonicare electric toothbrushes, Series 5000-7000, in
Europe and launched new localized products in China, including the
On-The-Go Compact Shaver, which earned a top ranking for new
product sales from leading online retailer JD.com.
- Peer-reviewed life
cycle assessment results were published in the leading sector
publication Radiology, following close collaboration between the
Vanderbilt University Medical Center radiology department and
Philips. The analysis underscores the importance of joining forces
to tackle significant operational and sustainability challenges,
such as reducing the cost of care and reducing carbon
footprint.
Leadership and culture
Philips is strengthening its culture of impact with care, acting
with integrity with patient safety and quality as the number one
priority. Philips continues to simplify its operating model, with
end-to-end Businesses holding single accountability, supported by
leaner central Functions and strong customer-facing organizations
in the Regions and countries.
Since the start of the three-year plan, 75% of executive hires
across the company have come from a health technology background.
Recent appointments to the Executive Committee include leaders for
Precision Diagnosis, International Region, and Greater China
Region, plus a new Chief Financial Officer on the Board of
Management.
Productivity
Productivity initiatives are ahead of plan and delivered savings
of EUR 163 million in Q4: operating model savings of EUR 47
million, procurement savings of EUR 56 million, and other programs
savings of EUR 59 million. Since 2023, productivity initiatives
have delivered savings of more than EUR 1.7 billion.
Philips is raising its productivity savings target for the
2023-2025 period from EUR 2 billion to EUR 2.5 billion, driven by
cost efficiencies and further simplification of its operating
model, with EUR 800 million to be delivered in 2025.
Outlook Philips remains focused on successfully executing
its three-year plan to drive operational improvements and create
value with sustainable impact, within a challenging macro
environment. For 2025, Philips expects:
- 1%-3% comparable
sales growth, including a mid- to high-single-digit decline in
China
- Adjusted EBITA
margin increasing 30-80 bps to 11.8%-12.3%
- Free cash flow
before payment of the USD 1.1 billion cash-out relating to the US
medical monitoring and personal injury settlements will be at the
lower end of the range of EUR 1.4 billion to EUR 1.6 billion. Net
of this cash-out, free cash flow will be EUR 0.4 billion to EUR 0.6
billion.
We anticipate comparable sales growth to be back-end-loaded in
the year, with a mid-single-digit decline in Q1 mainly due to lower
demand in China and royalties phasing, with correspondingly lower
Adjusted EBITA margin.
The outlook includes the impact of the recently announced
US-China tariffs. It excludes ongoing Philips Respironics-related
legal proceedings, including the investigation by the US Department
of Justice.
Respironics Recall
In December 2024, Philips Respironics obtained final approval
for the recall-related medical monitoring settlement, and in
February 2025, the personal injury settlement became final
following a successful registration process. The aggregate amount
of the settlements is USD 1.1 billion; payment is expected in the
first half of 2025.
Capital allocation
Philips intends to submit to the 2025 Annual General Meeting of
Shareholders a proposal to declare a dividend of EUR 0.85 per
common share, in shares or cash at the option of the shareholder,
with a maximum of 50% of the total dividend distribution to all
shareholders being available for payment in cash. If more than 50%
of the total dividend is requested by the shareholders to be paid
out in cash, those shareholders who have chosen to receive their
dividend in cash will receive their cash dividend on a pro-rata
basis, the remainder being paid out in shares.
Click here to view the release online
For further information, please contact: Michael
Fuchs Philips Global External Relations Tel.: +31 6 1486 9261
E-mail: michael.fuchs@philips.com Ben Zwirs Philips Global
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 2024 sales of EUR 18 billion and employs approximately
67,800 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 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. 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: macro-economic and
geopolitical changes, including protectionism measures such as
announced and proposed tariffs and retaliatory trade measures in
response thereto; Philips’ ability to keep pace with the changing
health technology environment; Philips’ ability to gain leadership
in health informatics and artificial intelligence in response to
developments in the health technology industry; integration of
acquisitions and their delivery on business plans and value
creation expectations; ability to meet expectations with respect to
ESG-related matters; securing and maintaining Philips’ intellectual
property rights, and unauthorized use of third-party intellectual
property rights; failure of products and services to meet quality
or security standards, adversely affecting patient safety and
customer operations; the resilience of our supply chain; challenges
in simplifying our organization and our ways of working; attracting
and retaining personnel; breach of cybersecurity; challenges in
driving operational excellence and speed in bringing innovations to
market; treasury and financing risks; tax risks; reliability of
internal controls; compliance with regulations and standards
involving quality, product safety, (cyber) security and artificial
intelligence; and compliance with business conduct rules and
regulations including privacy, existing and upcoming ESG disclosure
and due diligence requirements. 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.
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