Philips delivers strong order intake growth in the second quarter, margin improvement and sales growth; reiterates full-year outlook
Philips reported strong performance in Q2 2024, with comparable sales growth of 2% to EUR 4.5 billion and order intake growth of 9%. The company's Adjusted EBITA margin improved to 11.1%, driven by productivity measures and operational improvements. Key highlights include:
- Income from operations of EUR 816 million, including EUR 538 million insurance income
- Operating cash inflow of EUR 89 million
- Strong performance in North America and mature markets
- Challenges in China due to government anti-corruption measures
- Reaffirmation of full-year 2024 outlook: 3-5% comparable sales growth, Adjusted EBITA margin of 11-11.5%, and free cash flow of EUR 0.9-1.1 billion
Philips continues to focus on enhancing execution, improving supply chain resilience, and increasing productivity through simplification of its operating model.
Philips ha riportato una forte performance nel secondo trimestre del 2024, con una crescita delle vendite comparabili del 2% fino a 4,5 miliardi di euro e una crescita degli ordini in entrata del 9%. Il margine EBITA rettificato dell'azienda è migliorato all'11,1%, grazie a misure di produttività e miglioramenti operativi. I punti salienti includono:
- Reddito da operazioni di 816 milioni di euro, compresi 538 milioni di euro di reddito assicurativo
- Flusso di cassa operativo di 89 milioni di euro
- Forte performance in Nord America e mercati consolidati
- Sfide in Cina a causa delle misure anti-corruzione del governo
- Riaffermazione delle previsioni per l'intero anno 2024: crescita delle vendite comparabili del 3-5%, margine EBITA rettificato dell'11-11,5% e flusso di cassa disponibile di 0,9-1,1 miliardi di euro
Philips continua a concentrarsi sul miglioramento dell'esecuzione, sull'aumento della resilienza della catena di approvvigionamento e sull'incremento della produttività attraverso la semplificazione del proprio modello operativo.
Philips reportó un fuerte desempeño en el segundo trimestre de 2024, con un crecimiento de ventas comparables del 2% hasta 4.5 mil millones de euros y un crecimiento en la recepción de pedidos del 9%. El margen EBITA ajustado de la compañía mejoró al 11.1%, impulsado por medidas de productividad y mejoras operativas. Los aspectos destacados incluyen:
- Ingresos de operaciones de 816 millones de euros, incluidos 538 millones de euros por ingresos de seguros
- Flujo de caja operativo de 89 millones de euros
- Fuerte desempeño en América del Norte y mercados maduros
- Desafíos en China debido a las medidas anti-corrupción del gobierno
- Reafirmación de las perspectivas para todo el año 2024: crecimiento de ventas comparables del 3-5%, margen EBITA ajustado del 11-11.5% y flujo de caja libre de 0.9-1.1 mil millones de euros
Philips continúa enfocándose en mejorar la ejecución, aumentar la resiliencia de la cadena de suministro y aumentar la productividad a través de la simplificación de su modelo operativo.
필립스는 2024년 2분기에 비교 가능한 매출 성장 2%로 45억 유로를 기록했으며, 주문 수주 성장 9%를 보고했습니다. 회사의 조정 EBITA 마진은 11.1%로 개선되었으며, 이는 생산성 향상과 운영 개선에 따른 것입니다. 주요 하이라이트는 다음과 같습니다:
- 운영 수익 8억 1,600만 유로, 5억 3,800만 유로의 보험 수익 포함
- 운영 현금 유입 8,900만 유로
- 북미 및 성숙한 시장에서의 강력한 성과
- 정부의 반부패 조치로 인한 중국 내 도전
- 2024년 전체 연도 전망 재확인: 3-5% 비교 가능한 매출 성장, 조정 EBITA 마진 11-11.5%, 자유 현금 흐름 9억-11억 유로
필립스는 실행 개선, 공급망 회복력 강화 및 운영 모델의 단순화를 통한 생산성 증대에 계속 집중하고 있습니다.
Philips a signalé de solides performances au deuxième trimestre 2024, avec une croissance des ventes comparables de 2% à 4,5 milliards d'euros et une croissance des commandes de 9%. La marge EBITA ajustée de l'entreprise a augmenté à 11,1%, grâce à des mesures de productivité et des améliorations opérationnelles. Les points clés comprennent :
- Résultat d'exploitation de 816 millions d'euros, dont 538 millions d'euros de revenus d'assurance
- Flux de trésorerie opérationnel de 89 millions d'euros
- Performances solides en Amérique du Nord et sur les marchés matures
- Défis en Chine en raison des mesures de lutte contre la corruption du gouvernement
- Réaffirmation des prévisions pour l'année 2024 : croissance des ventes comparables de 3 à 5 %, marge EBITA ajustée de 11 à 11,5 % et flux de trésorerie libre de 0,9 à 1,1 milliard d'euros
Philips continue de se concentrer sur l'amélioration de l'exécution, le renforcement de la résilience de la chaîne d'approvisionnement et l'augmentation de la productivité grâce à la simplification de son modèle opérationnel.
Philips berichtete über eine starke Leistung im 2. Quartal 2024, mit einem vergleichbaren Umsatzwachstum von 2% auf 4,5 Milliarden Euro und einem Bestellauftragswachstum von 9%. Die angepasste EBITA-Marge des Unternehmens stieg auf 11,1%, unterstützt durch Produktivitätsmaßnahmen und operative Verbesserungen. Die wichtigsten Punkte sind:
- Betriebsergebnis von 816 Millionen Euro, einschließlich 538 Millionen Euro Versicherungseinnahmen
- Operativer Cashflow von 89 Millionen Euro
- Starke Leistung in Nordamerika und reifen Märkten
- Herausforderungen in China aufgrund staatlicher Antikorruptionsmaßnahmen
- Bestätigung der Prognose für das gesamte Jahr 2024: 3-5% vergleichbares Umsatzwachstum, angepasste EBITA-Marge von 11-11,5% und freien Cashflow von 0,9-1,1 Milliarden Euro
Philips konzentriert sich weiterhin auf die Verbesserung der Ausführung, die Erhöhung der Resilienz der Lieferkette und die Steigerung der Produktivität durch die Vereinfachung seines Betriebsmodells.
- Comparable order intake grew 9% in Q2 and 3% in H1 2024
- Adjusted EBITA margin increased to 11.1% from 10.1% in Q2 2023
- Diagnosis & Treatment comparable sales increased 4%
- Connected Care comparable sales increased 2%
- Personal Health comparable sales increased 2% globally
- Total productivity savings of EUR 195 million in the quarter
- S&P Global Ratings and Moody's Ratings upgraded Philips' credit ratings outlook to stable
- Signed multi-year partnerships with several hospitals for monitoring and image-guided therapy
- Secured major multi-year strategic partnership with Bon Secours Mercy Health in the US
- Launched next-generation AI-enabled cardiovascular ultrasound platform with FDA-cleared AI tools
- Free cash outflow of EUR 64 million, including EUR 415 million payment for Respironics settlement
- Decline in sales in China due to government anti-corruption measures
- Ongoing Philips Respironics-related legal proceedings and US Department of Justice investigation
Insights
Philips' Q2 2024 results show promising signs of recovery and operational improvement. Comparable sales grew by
Key financial highlights include:
- Income from operations of
EUR 816 million , boosted byEUR 538 million in insurance income - Operating cash inflow of
EUR 89 million , despite a free cash outflow ofEUR 64 million - Productivity savings of
EUR 195 million
The company's focus on execution, supply chain resilience and operational simplification is yielding results. However, challenges remain, particularly in China due to government anti-corruption measures affecting hospital order lead times.
Philips' reiteration of its full-year outlook (
Investors should monitor the ongoing Respironics-related legal proceedings, as these could potentially impact future performance and are excluded from the current outlook.
Philips' Q2 results highlight significant advancements in medical technology innovation, particularly in cardiovascular care and minimally invasive treatments. The company's focus on AI-enabled solutions is a strategic move to address healthcare's pressing needs for efficiency and precision.
Key developments include:
- Launch of a next-generation AI-enabled cardiovascular ultrasound platform with FDA-cleared AI tools
- First implant of the Duo Venous Stent System following FDA pre-market approval
- Introduction of LumiGuide, a 3D medical device guidance solution for radiation-free minimally invasive surgery
These innovations position Philips at the forefront of medical technology, potentially driving future growth in the Diagnosis & Treatment segment, which saw a
The company's multi-year partnerships with hospitals for monitoring and image-guided therapy solutions indicate a strong market position and potential for recurring revenue streams. However, the ongoing focus on patient safety and quality, particularly in light of past Respironics issues, remains important for maintaining trust and market share in the medical device industry.
Philips' ability to translate these innovations into sustained financial performance will be key for investors to watch in the coming quarters.
Philips' Q2 2024 results reveal interesting market dynamics across different geographies and segments. The
Key market insights:
- Strong performance in mature and growth geographies, offset by decline in China
- Robust
2% growth in Personal Health segment globally, driven by markets outside China - Connected Care segment saw
2% growth, with strong performance in Enterprise Informatics
The launch of consumer health innovations in Greater China, including medical-grade hair removal devices and themed shavers, demonstrates Philips' efforts to adapt to local consumer preferences and maintain market relevance.
The company's ESG leadership, recognized by S&P and inclusion in the 'FTSE4Good' index, may appeal to the growing segment of sustainability-focused investors. This could potentially enhance Philips' attractiveness in a market increasingly concerned with corporate responsibility.
Looking ahead, Philips' ability to navigate the challenging macro environment while capitalizing on the fundamentally attractive Chinese market will be crucial. The company's strategic focus on AI-enabled solutions and minimally invasive treatments aligns well with global healthcare trends, potentially positioning it for long-term growth despite short-term geographical challenges.
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
Adjusted EBITA margin for the group increased to
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
Connected Care comparable sales increased
Personal Health comparable sales increased
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
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.
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