Philips' Fourth-Quarter and Annual Results 2023
jan 29, 2024 | 6 minute read
Financiële resultaten Persbericht
FY and Q4 Group performance highlights
* See table below
Metrics affected by provisions charged to sales | FY 2023 | Q4 2023 |
Sales - as reported in millions of EUR | 18,169 | 5,062 |
Comparable sales growth - excluding provisions charged to sales 1) | 7% | 3% |
Comparable sales growth | 6% | (1)% |
Adjusted EBITA margin - excluding provisions charged to sales 1) | 10.5% | 12.5% |
Adjusted EBITA margin | 10.6% | 12.9% |
1) Excluding provisions charged to sales of EUR 174 million in Q4 2023 mainly in connection with the Respironics consent decree.
Roy Jakobs, CEO of Royal Philips:
“Our strong results in 2023 were driven by solid execution of the first year of our three-year plan to create value with sustainable impact. While there is more work to be done, the progress we achieved in a volatile world lays a solid foundation for sustained performance. Patient safety and quality remain Philips’ highest priority across the company. Resolving the consequences of the Respironics recall for our patients and customers is a key focus area and I acknowledge and apologize for the distress and concern caused. We are fully committed to complying with the consent decree, which is an important step and provides a clear path forward. We continue to partner with many healthcare systems around the world, supporting them to become more efficient, and addressing their resourcing and productivity challenges with our AI-powered innovations. This includes our newly launched next-generation ultrasound systems, and our unique mobile MRI system with helium-free operations. We are confident in our plan to help consumers lead healthy lives and healthcare providers deliver efficient, high-quality care to patients in a sustainable way. Based on our ongoing actions to enhance execution, we expect further performance improvement in 2024.”
We saw strong growth throughout the year based on the actions we have taken to improve supply chain reliability and simplify our organization. Our order book is strong, and we are focused on improving order intake. Our new operating model enabled more effective ways of working across the company, and drove significant productivity improvements.
Philips Respironics consent decree
Outlook
Philips reiterates confidence in delivering the plan for 2023-2025, acknowledging that uncertainties remain. For full-year 2024, Philips expects to deliver 3-5% comparable sales growth and an Adjusted EBITA margin of 11-11.5%. The free cash flow from Philips' businesses is expected to amount to EUR 0.8-1 billion. This only excludes the remaining cash-out related to the previously announced resolution of the economic loss class action in the US. The previously stated 2023-2025 Group financial outlook of mid-single-digit comparable sales growth, low-teens Adjusted EBITA margin, and EUR 1.4-1.6 billion free cash flow now takes the consent decree into account and remains unchanged. It excludes the investigation by the US DOJ related to the Respironics field action and the impact of the ongoing litigation.
Segment performance
Diagnosis & Treatment comparable sales increased by 11% in 2023, with double-digit growth in Image Guided Therapy and Precision Diagnosis. The Adjusted EBITA margin improved to 11.6%, compared to 9.5% in 2022, driven by increased sales and pricing & productivity measures, partly offset by cost inflation. In Q4, Diagnosis & Treatment segment comparable sales increased 5%, with high-single-digit growth in Image Guided Therapy. The Adjusted EBITA margin was 10.4%, compared to 12.2% in Q4 2022, due to an unfavorable mix and phasing of production and costs. Connected Care comparable sales increased by 5%*) in 2023, driven by double-digit growth in Monitoring. The Adjusted EBITA margin increased to 6.9%*), compared to 2.1% in 2022, driven by increased sales and productivity measures, partly offset by cost inflation. In Q4, comparable sales were flat*), with high-single-digit growth in Enterprise Informatics. The Adjusted EBITA margin was 13.3%*), compared to 11.6% in 2022, mainly driven by pricing & productivity measures, partly offset by cost inflation. Personal Health comparable sales growth was 3% in 2023, strongly driven by Personal Care. The Adjusted EBITA margin improved to 16.6%, compared to 14.8% in 2022, as a result of increased sales and pricing & productivity measures. In Q4, comparable sales increased by 7%, mainly driven by Personal Care. The Adjusted EBITA margin increased to 19.9%, compared to 17.0% in Q4 2022, mainly driven by increased sales and pricing & productivity measures. *) Excluding provisions charged to sales of EUR 174 million in Q4 2023 mainly in connection with the Respironics consent decree.
Productivity
Supported by significant change management efforts, to date Philips has reduced the workforce by around 8,000 roles, out of 10,000 roles in total planned by 2025. For the full year, total savings amounted to EUR 956 million. In Q4, operating model productivity savings amounted to EUR 149 million. Procurement savings amounted to EUR 64 million, and other productivity programs delivered savings of EUR 58 million, resulting in total savings of EUR 271 million.
Customer, innovation and ESG highlights
Capital allocation
Philips intends to submit to the 2024 Annual General Meeting of Shareholders a proposal to declare a dividend of EUR 0.85 per common share and to distribute such dividend in shares. In the fourth quarter, Philips completed the cancellation of 15,134,054 of its shares, resulting in 906,403,156 outstanding shares as of December 31, 2023. The cancelled shares were acquired as part of the EUR 1.5 billion share repurchase program for capital reduction purposes that was announced on July 26, 2021. Philips will complete the share repurchase program in April 2024, which is expected to result in a further cancellation of 4.4 million shares in Q2 2024.
Philips Q4 2023 results downloads
Visit our results hub for more on our financial and sustainability performance over the past quarter.
Conference call and audio webcast
Roy Jakobs, CEO, and Abhijit Bhattacharya, CFO, will host a conference call for investors and analysts at 10:00 am CET today to discuss the full year 2023 results. A live webcast of the conference call will be available on the Philips Investor Relations website and can be accessed here. More information about Roy Jakobs and Abhijit Bhattacharya Click here for Mr. Jakobs' CV and images
Click here for Mr. Bhattacharya's CV and images
Media contact
Elco van Groningen
Philips External Relations
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Ben Zwirs
Philips External Relations
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By clicking on the link, you will be leaving the official Royal Philips ("Philips") website. Any links to third-party websites that may appear on this site are provided only for your convenience and in no way represent any affiliation or endorsem*nt of the information provided on those linked websites. Philips makes no representations or warranties of any kind with regard to any third-party websites or the information contained therein.
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Dorin Danu
Philips Investor Relations
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By clicking on the link, you will be leaving the official Royal Philips ("Philips") website. Any links to third-party websites that may appear on this site are provided only for your convenience and in no way represent any affiliation or endorsem*nt of the information provided on those linked websites. Philips makes no representations or warranties of any kind with regard to any third-party websites or the information contained therein.
You are about to visit a Philips global content page
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