AMSTERDAM: Philips’ third-quarter results show improved operational performance, with sales increasing 11% to EUR 4.5 billion and adjusted EBITA increasing to EUR 457 million, or 10.2% of sales. The company’s order book remains strong, and it has raised its outlook for the full year 2023 to 6-7% comparable sales growth and an adjusted EBITA margin of 10-11%.

Key highlights:

• Sales 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.
• Comparable order intake was 9% lower than in Q3 2022, mainly due to a high comparison base related to the exceptionally high levels in 2021, lower orders in China, and longer order lead times.
• The company is further raising its outlook for the full year 2023 to 6-7% comparable sales growth and an adjusted EBITA margin of 10-11%, with free cash flow at the upper end of the target range of EUR 0.7-0.9 billion.

Key customer, innovation, and ESG highlights:

• Philips signed a 10-year, EUR 100 million Enterprise Monitoring as a Service agreement with one of the largest health systems in the US, covering 20 hospitals with over 3,000 beds.
• Philips launched its new Image Guided Therapy Mobile C-arm System 3000, which enables surgeons to deliver enhanced care to more patients.
• Philips launched its ambulatory monitoring offering in Japan, combining Philips ePatch Holter monitors with ECG analysis through AI and advanced algorithms.
• Philips completed a hospital-wide joint action plan for Tampere Heart Hospital in Finland to decarbonize its clinical operations.
• Philips successfully launched the Sonicare DiamondClean 7900 Series electric toothbrush in China on major online shopping channels Alibaba and JD.com.

Philips Respironics field action for specific sleep therapy and ventilator devices:

• Globally, over 99% of the sleep therapy device registrations that are complete and actionable have been remediated, while the remediation of the ventilator devices remains ongoing.
• Based on the test results to date, Philips Respironics and third-party experts concluded that use of the sleep therapy devices is not expected to result in appreciable harm to health in patients.
• In October 2023, Philips Respironics received preliminary court approval for the settlement agreement to resolve all economic loss claims in the US Multidistrict Litigation (MDL) related to the recall.

Capital allocation:

• In the third quarter, Philips issued EUR 500 million fixed-rate notes due 2031 under its European Medium-Term Note (EMTN) program.
• During the quarter, Philips settled a number of forward purchase transactions entered into under its EUR 1.5 billion share buyback program for capital reduction purposes announced on July 26, 2021, thereby acquiring a total of 4.2 million shares for a total amount of approximately EUR 154 million. Following further settlements in Q4 2023, Philips intends to cancel approximately 15.1 million shares acquired and to be acquired under this program, before year-end.