AMSTERDAM: Philips, a global leader in health technology, announced its 2023 financial results, showing a 7% increase in comparable sales and a 10.5% increase in adjusted EBITA margin. The company also generated a free cash flow of EUR 1,582 million, up from EUR 1,018 million in 2022.

The company attributed its strong performance to the solid execution of its 2023-2025 plan, which focuses on innovation, growth, and operational excellence. Philips also maintained its proposed dividend of EUR 0.85 per share, to be distributed in shares.

Philips also revealed that it has agreed on the terms of a consent decree with the US Department of Justice, representing the US Food and Drug Administration (FDA), regarding its Respironics business, which produces sleep and respiratory care devices. The consent decree will provide Philips Respironics with a roadmap to demonstrate compliance with regulatory requirements and to restore the business in the US, where it will not sell new devices until the decree is met. Outside the US, Philips Respironics will continue to provide new devices and services, subject to certain requirements.

Philips recorded a provision of EUR 363 million in Q4 2023 related to the consent decree, which is a multi-year plan. In 2024, Philips expects around 100 basis points of costs related to the decree. The consent decree is being finalized and will be submitted to the relevant US court for approval.

Philips reiterated its confidence in delivering its 2023-2025 plan, expecting to achieve 3-5% comparable sales growth and 11-11.5% adjusted EBITA margin in 2024.

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 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.

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.”

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.

Philips Q3 results show improved operational performance, with sales increasing 11%