Nov 08, 2018

Philips provides update on performance and value creation journey at Capital Markets Day in Amsterdam

Company reaffirms targets of 4-6% comparable sales growth and an Adjusted EBITA margin improvement of 100 basis points on average annually for the 2017–2020 period [1], and improvement of organic Return on Invested Capital (ROIC) to mid-to-high teens in 2020;
Philips expects to increase the annual free cash flow to above EUR 1.5 billion in 2020 [2]

Amsterdam, the Netherlands – At a meeting with investors and financial analysts today in Amsterdam, Royal Philips (NYSE: PHG, AEX: PHIA) CEO Frans van Houten, together with CFO Abhijit Bhattacharya and several executives, will provide an update on the company’s performance and value creation journey.

“We are excited about the strong demand for our health technology innovations, and we will continue to drive our value creation journey, delivering mid-single-digit comparable sales growth and an annual improvement of the Adjusted EBITA margin of around 100 basis points,” said Frans van Houten. “To expand our market positions, increase margins and fully unlock Philips’ potential, we will further improve customer and operational excellence, boost growth in our core businesses through geographical expansion and consultative customer partnerships, and innovate with integrated solutions to improve people’s health and enhance the productivity of care providers.”

Innovation is core to Philips’ value creation, as exemplified by the company’s deep clinical partnerships and global EUR 1.8 billion R&D program. More than half of Philips’ annual sales is related to new product sales [3], such as Philips’ Azurion next-generation image-guided therapy platform, General Care Solution with Early Warning Scoring to identify subtle signs of deterioration in a general floor patient’s condition, and Dream Family solution for sleep therapy.

We are excited about the strong demand for our health technology innovations, and we will continue to drive our value creation journey, delivering mid-single-digit comparable sales growth and an annual improvement of the Adjusted EBITA margin of around 100 basis points.

Frans van Houten

CEO Philips

Philips reiterates its targets of 4-6% comparable sales growth and an Adjusted EBITA margin improvement of 100 basis points on average per year for the 2017–2020 period [1], and an improvement of the organic Return on Invested Capital (ROIC) to mid-to-high teens in 2020. The company expects to increase the annual free cash flow to above EUR 1.5 billion in 2020 [2]. Philips increased its productivity program from EUR 1.2 billion by 2019, to EUR 1.8 billion by 2020.

Presentations at Philips’ headquarters in Amsterdam will start at 11:30 am CET. Until approximately 15:45 pm CET, the plenary sessions can be followed via a live webcast. A video summary of the subsequent business zooms will be made available soon after the end of the event. Please click on this link to follow the webcast and download the slides that will be used during the day.

[1] Comparable sales exclude the effect of currency movements and acquisitions and divestments (changes in consolidation). Philips believes that comparable sales information enhances understanding of sales performance; Adjusted EBITA is defined as Income from operations (EBIT) excluding amortization of acquired intangible assets, impairment of goodwill and other intangible assets, restructuring charges, acquisition-related costs and other one-time charges and gains.

[2] Free cash flow adjusted for one-time pension contributions and significant litigation

[3] New product sales over three years based on YTD Q3 2018

About Royal Philips

Royal Philips (NYSE: PHG, AEX: PHIA) is a leading health technology company focused on improving people's health 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 2017 sales of EUR 17.8 billion and employs approximately 77,000 employees with sales and services in more than 100 countries. News about Philips can be found at www.philips.com/newscenter.

Forward-looking statements

This release contains 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 the strategy, estimates of sales growth, future EBITA, future developments in Philips’ organic business and the completion of acquisitions and divestments. 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.