Creating value with sustainable impact
Philips operates in fundamentally attractive health technology market segments that grow 3-6% annually and have mid-to-high-teens margins. These are driven by global trends, such as aging populations driving the demand for care and the need to improve productivity in healthcare. The company has leading market positions in consumer and professional health, enabled by a strong portfolio, high customer intimacy, a strong brand and purpose, and clear ESG commitments. However, Philips is not capitalizing on the full potential of these strong market positions as it faces a number of significant operational challenges as reflected in its 2022 performance.
The company will address the challenges, improve performance, and drive progressive value creation through a strategy of focused organic growth and pivoting its innovation model to increase the impact of patient- and people-centric innovation at scale. Improved execution across three priorities will be the key value driver: 1) patient safety and quality, 2) supply chain reliability, and 3) a simplified, more agile operating model. This will be supported by a reinvigorated culture of accountability, and strong health technology talent and capabilities.
By delivering its strategy, Philips will drive performance improvements over time, first addressing the challenges and laying down a strong foundation in 2023 and accelerating profitable growth thereafter, to deliver on the full potential of its business segments, supported by a balanced capital allocation. Philips aims to improve its performance to mid-single-digit comparable sales growth with a low-teens Adjusted EBITA margin by 2025, and to mid-single-digit comparable sales growth and mid-to-high-teens Adjusted EBITA margin beyond 2025.*