Debt structure

The debt of Royal Philips consists of bonds (USD and EUR), forward contracts, leases (finance and operating) and bank borrowings. Next to that, Philips has a EUR 1 billion committed revolving credit facility which will expire in March 2027. The facility can be used for general group purposes, such as a backstop of its Commercial Paper Program.

The Commercial Paper Program amounts to USD 2.5 billion, under which Philips can issue commercial paper up to 364 days in tenor, both in the US and in Europe, in any major freely convertible currency. As per end of Q3 2022, there is EUR 200 million outstanding under the program.

The total net debt of Philips per 30 September, 2022 is EUR 7.5 billion. The long-term debt has maturities up to 2042 and an average tenor of 8.1 years. The graph below shows the debt maturity profile, per end of September 2022:

1. Short-term debt includes local credit facilities that are being rolled forward on a continuous basis; 2.Debt includes forward transactions entered into as part of share repurchase programs for share cancellation and LTI purposes; 3. Based on long-term debt only, excludes short-term debt and forward share repurchases for share cancellation and LTI purposes.
 

The Net debt:Group equity ratio provides insight in the financial strength of Philips. This measure is used by Philips management and investment analysts to evaluate financial strength and funding requirements.

The Net debt: Group equity ratio may be subject to limitations because cash and cash equivalents are used for various purposes, not only debt repayment. The net debt calculation deducts all cash and cash equivalents whereas these items are not necessarily available exclusively for debt repayment at any given time.