Philips delivers strong sales growth, profitability and cash flow; raises full-year outlook

October 23, 2023

Third-quarter highlights

• Group sales increased 11% on a comparable basis to EUR 4.5 billion
• Income from operations at EUR 224 million, compared to a loss of EUR 1,529 million in Q3 2022
• Adjusted EBITA increased to EUR 457 million, or 10.2% of sales, compared to EUR 209 million, or 4.8% of sales, in Q3 2022
• Comparable order intake was -9% compared to Q3 2022; order book remains strong
• Operating cash flow improved to EUR 489 million, compared to an outflow of EUR 180 million in Q3 2022
• Restructuring and productivity plans on track with total savings of EUR 258 million in the quarter
• Outlook for full-year 2023 raised to 6-7% comparable sales growth and an Adjusted EBITA margin of 10-11%

Roy Jakobs, CEO of Royal Philips:
“Our improved operational performance was driven by our focus on execution to enhance patient safety and quality, strengthen our supply chain reliability and establish a simplified operating model.

The order book remains strong, and we are taking the necessary actions to improve order intake by shortening lead times from order to delivery and building on the positive impact we are making with our innovations, for example in predictive data analytics and artificial intelligence across our portfolio, to help improve the quality and efficiency of care delivery.

Completing the Philips Respironics recall remains our highest priority, with the remediation of the sleep therapy devices almost complete and remediation of the ventilators ongoing.

Based on our improved performance, we are further raising the outlook for both sales and profitability for the full year 2023, although recognizing uncertainties remain in an increasingly volatile geopolitical environment. The progress we are making reinforces our confidence in delivering on the three-year plan to create value with sustainable impact.”

Group and segment performance

Sales for the Group increased 11% on a comparable basis to EUR 4.5 billion, driven by growth in all segments and geographies. Adjusted EBITA increased to EUR 457 million, or 10.2% of sales, mainly driven by increased sales, pricing and productivity measures. Operating cash flow and free cash flow increased to EUR 489 million and EUR 333 million respectively in the quarter, driven by higher earnings and improved working capital management.