Philips delivers Q1 sales of EUR 3.9 billion, with good demand
driving 5% comparable order intake growth
April 25, 2022 First-quarter highlights
- Group sales amounted to EUR 3.9 billion, with a 4% comparable
sales decline on the back of 9% comparable sales growth in Q1
2021
- Comparable order intake increased 5%, driven by the Diagnosis
& Treatment businesses and Hospital Patient Monitoring
- Income from continuing operations amounted to a loss of EUR 152
million, compared to a loss of EUR 34 million in Q1 2021
- Adjusted EBITA of EUR 243 million, or 6.2% of sales, compared
to 9.5% of sales in Q1 2021
- Operating cash flow was an outflow of EUR 227 million, compared
to an inflow of EUR 321 million in Q1 2021
- Philips provides update on Philips Respironics field action
related to specific CPAP, BiPAP and mechanical ventilators
Frans van Houten, CEO of Royal Philips:“Our
customers confirm the relevance of our strategy and portfolio, as
evidenced by the further growth of our all-time-high order book.
Comparable order intake growth for the Group amounted to 5%, driven
by good growth across the Diagnosis & Treatment businesses, as
well as Hospital Patient Monitoring and Connected Care Informatics.
In addition, we partnered with 12 more hospitals to help them
transform the delivery of care, further building on the 80 new
long-term strategic partnerships signed in 2021. In China, we
signed an agreement with Shanghai East Hospital to provide its
hospitals in the Shandong and Hainan provinces with a broad range
of advanced imaging and critical care solutions. I am also pleased
with the 8% comparable sales growth for our Personal Health
businesses, which demonstrates continued strong consumer demand for
our propositions enabling people to take care of their health and
well-being.
Thanks to the hard work of our people, we recorded better than
expected sales of EUR 3.9 billion in very challenging
circumstances, with significant supply chain headwinds as well as
the consequences of the Respironics field action. Adjusted EBITA
margin for the Group was 6.2% in the quarter.
The strong customer demand and order book, coupled with our
first-quarter sales performance, support the growth and margin
expansion range for the full year as communicated in January 2022.
At the same time, it is important we recognize the increasing risks
related to the COVID-19 situation in China, the Russia-Ukraine war,
supply chain challenges and inflationary pressures, which may
potentially impact our ability to convert our strong order book to
sales and achieve our margin target if conditions deteriorate
further. Our teams are fully focused on everyday execution,
delivering on the customer demand and strong order book, and
addressing the supply chain risks. We are implementing additional
cost measures, as well as price increases, to mitigate the
inflationary headwinds.”
Business segment performanceThe Diagnosis &
Treatment businesses’ comparable sales decreased 2%, on the back of
9% comparable sales growth in Q1 2021. High-single-digit growth in
Image-Guided Therapy was more than offset by a decline in
Ultrasound and in Diagnostic Imaging due to electronic component
shortages, and on the back of strong growth in these businesses
last year. Comparable order intake increased 7%, with double-digit
growth in Image-Guided Therapy and mid-single-digit growth in
Ultrasound and Diagnostic Imaging, reflecting robust traction for
Philips’ very attractive offering. The Adjusted EBITA margin was
5.9%, mainly due to the decline in sales and the impact of supply
chain headwinds. The Connected Care businesses’ comparable sales
decreased 21%, mainly due to the consequences of the Respironics
field action. Comparable order intake was in line with Q1 2021,
with continued strong demand and share gains in Hospital Patient
Monitoring and Connected Care Informatics. The Adjusted EBITA
margin amounted to 0.4%, mainly due to the decline in sales and the
impact of supply chain headwinds, partly offset by cost savings.
The Personal Health businesses’ comparable sales increased by a
strong 8%, primarily driven by double-digit growth in Oral
Healthcare. The Adjusted EBITA margin amounted to 15.3%, mainly due
to the increase in sales, partly offset by supply chain headwinds
and an adverse currency impact.
Philips’ ongoing focus on innovation and partnerships resulted
in the following key developments in the quarter:
- Philips signed 12 new long-term strategic partnerships in the
quarter, including a 10-year agreement with Oulu University
Hospital in Finland to deliver the latest Philips Azurion
image-guided therapy solutions, as well as maintenance, consultancy
and financing services.
- Philips expanded its leading ultrasound portfolio with advanced
hemodynamic measurement capabilities on its handheld ultrasound
Lumify, enabling clinicians to quantify blood flow in a wide range
of point-of-care diagnostic applications, including cardiology and
obstetrics & gynecology.
- Philips entered into partnerships with healthcare providers in
the UK and Germany to deliver its vendor-neutral Radiology
Operations Command Center, which enables remote collaboration
between technologists, radiologists and imaging operations teams
across multiple sites, to help increase productivity and expand
access to MR- and CT-based diagnosis.
- Building on the market share gain in 2021, Philips MR delivered
strong double-digit order intake growth in the quarter, driven by
all major product families. Further highlighting the success of its
unique helium-free operating MR portfolio, since its launch Philips
has installed more than 500 of its Ingenia Ambition MRI systems,
which deliver superb image quality and perform MRI exams up to 50%
faster.
- Philips is successfully expanding into interventional oncology
with the installation of its innovative lung cancer diagnosis and
treatment solution Lung Suite in hospitals in Belgium, France,
Israel, and the UK. Based on Philips Azurion, this solution
enhances the accuracy of biopsy procedures and provides a therapy
option to immediately treat early-stage lung cancer patients.
- Underlining the clinical and economic value of remote cardiac
patient monitoring, Philips announced new research demonstrating
increased atrial fibrillation detection and significant cost
savings using Philips’ mobile cardiac outpatient telemetry
monitoring. In addition, Philips expanded its remote cardiac
monitoring portfolio with a patch-based, clinical-grade ECG to
improve patient recruitment, compliance and retention for clinical
trials.
- Philips completed the global introduction of its new Philips
Shaver S9000 with SkinIQ with its launch in Japan, resulting in
accelerated sales growth for this category, and a 4.9 (out of 5)
consumer rating and review score within the first month.
- Following the successful refresh of its entry-range electric
toothbrushes, the launch of the Sonicare 9900 Prestige premium
range, and the launch of innovative interdental cleaning devices in
2021, Philips Oral Healthcare recorded strong double-digit
comparable sales growth in the quarter, driven by North America and
China.
Cost savingsOur cost savings programs delivered
EUR 97 million in the first quarter. After deducting supply cost
increases, net savings amounted to EUR 8 million in the first
quarter. In response to the inflationary headwinds, the company is
implementing additional cost-saving measures of EUR 150-200 million
for the full year. Philips Respironics field action related
to specific CPAP, BiPAP and mechanical ventilators“We are
committed to supporting the community of patients who rely on our
sleep and respiratory care solutions for their health and quality
of life, and the physicians and customers who are dedicated to
meeting patient needs. We are replacing or repairing the devices
related to the Respironics field action as fast as possible and are
continuing to update patients and customers about the progress of
the program. We have a strong program management in place
overseeing every aspect of the remediation, which involves more
than 1,000 of our colleagues,” said Frans van Houten, CEO of Royal
Philips.
Philips has a strong program management in place led by Roy
Jakobs, Chief Business Leader of the Connected Care businesses and
member of Philips’ Executive Committee, to ensure the Respironics
field action is executed with speed and accuracy. Management
responsibility and oversight have been strengthened with
organizational changes implemented in Philips Respironics and the
Quality & Regulatory function. Staffing and expertise related
to post-market surveillance, medical affairs, toxicology and
bio-compatibility have also been increased.
Philips Respironics has more than tripled its weekly production
output compared to 2020, despite the ongoing global supply chain
challenges. To date, Philips Respironics has produced more than 2.2
million repair kits and replacement devices. Following another wave
of Philips Respironics’ comprehensive patient and customer
communication outreach and based on current insights, the total
expected units to be remediated have increased by approximately
300,000, primarily in the US. Philips Respironics recorded a EUR 65
million increase in the field action provision in the quarter to
cater for the higher expected volume of devices eligible for
remediation and higher communication costs. Additionally, a further
EUR 100 million provision was recorded for potential higher cost of
execution and to ensure the speed of the program in a volatile
environment. Philips Respironics expects to complete over 90% of
the production and shipments to customers in 2022.
Philips Respironics continues to make good progress with the
comprehensive test and research program to better characterize the
possible health risks associated with the sound abatement foam in
the affected devices. Comprehensive testing and analyses related to
the affected CPAP and BiPAP devices are expected to be completed in
the second quarter of 2022.
On April 8, 2022, Philips Respironics and certain of Philips’
subsidiaries in the US received a subpoena from the US Department
of Justice to provide information related to events leading to the
Respironics recall. The relevant subsidiaries are cooperating with
the agency.
Click here to view the release online
For further information, please contact:
Ben Zwirs Philips Global Press Office Tel.: +31 6
1521 3446 E-mail: ben.zwirs@philips.com Derya
Guzel Philips Investor Relations Tel.: +31 20 59 77055
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 2021 sales of EUR 17.2 billion and
employs approximately 79,000 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 important
informationForward-looking statementsThis 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: Philips’
ability to gain leadership in health informatics in response to
developments in the health technology industry; Philips’ ability to
transform its business model to health technology solutions and
services; 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;
Philips' ability to execute and deliver on programs on business
transformation and IT system changes and continuity; the
effectiveness of our supply chain; attracting and retaining
personnel; COVID-19 and other pandemics; challenges to drive
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; treasury and financing risks; tax
risks; reliability of internal controls, financial reporting and
management process. 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
2021.Philips has recognized a provision related to the voluntary
recall notification in the US/field safety notice outside the US
for certain sleep and respiratory care products, based on Philips’
best estimate for the expected field actions. Future developments
are subject to significant uncertainties, which require management
to make estimates and assumptions about items such as quantities
and the portion to be replaced or repaired. Actual outcomes in
future periods may differ from these estimates and affect the
company's results of operations, financial position and cash
flows.Third-party market share dataStatements
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
RegulationThis press release contains inside information
within the meaning of Article 7(1) of the EU Market Abuse
Regulation. This press release was distributed at 07:00 am CET on
April 25, 1922.Use of non-IFRS informationIn
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 2021.Fair value
informationIn 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 2021. In certain cases independent valuations are obtained
to support management’s determination of fair
values.PresentationAll 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 2021 except for the adoption of new
standards and amendments to standards which are also expected to be
reflected in the company's consolidated IFRS financial statements
as at and for the year ending December 31, 2022.Prior-period
amounts have been reclassified to conform to the current-period
presentation; this includes immaterial organizational changes.*)
Non-IFRS financial measure. Refer to Reconciliation of non-IFRS
information.
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