Highlights
- Group sales amounted to
EUR 4.2 billion , with a 7% comparable sales decline mainly caused by continued supply shortages and prolonged lockdowns inChina , on the back of 9% comparable sales growth in Q2 2021 - Order book remains strong; comparable order intake increased 1% and includes a 5 percentage-points negative impact related to
China - Income from operations amounted to
EUR 11 million , compared toEUR 85 million in Q2 2021 - Adjusted EBITA of
EUR 216 million , or 5.2% of sales, compared toEUR 532 million , or 12.6% of sales, in Q2 2021 - Operating cash flow was an outflow of
EUR 306 million , mainly due to temporarily higher inventories, compared to an inflow ofEUR 332 million in Q2 2021 - In connection with the field action for specific CPAP, BiPAP and mechanical ventilator devices,
Philips Respironics has produced 3 million replacement devices and repair kits to date, and published encouraging test results for the first-generation DreamStation devices - Comprehensive measures in place to improve supply chain resilience and pricing; productivity program increased to
EUR 500 million per year through 2025 - Company has revised full-year 2022 outlook to 1-3% comparable sales growth and around 10% Adjusted EBITA margin, driven by 6-9% comparable sales growth in the second half of 2022
- For the 2023-2025 period, Philips has provided a revised performance improvement trajectory of 4-6% average annual comparable sales growth, and an Adjusted EBITA margin of 14-15%, as well as a free cash flow of around
EUR 2 billion by 2025
“Across our businesses, we have stepped up our actions on productivity, pricing, and strengthening supply chain resilience to mitigate the ongoing headwinds and associated risks. The positive impact of these actions, together with the strength of our order book and improving component supplies, give me confidence that we will resume growth from the third quarter onwards, resulting in 6-9% comparable sales growth and improved profitability in the second half of the year. For the full-year 2022, we expect to deliver 1-3% comparable sales growth and around 10% Adjusted EBITA margin.
Our products remain in good demand, as evidenced by the further growth of our already strong order book, confirming the relevance of our strategy and portfolio of innovations to our customers. In the second quarter, comparable order intake increased 1% and includes a 5 percentage-points negative impact related to
Our performance in the second quarter was impacted by global, industry-wide challenges including supply shortages, COVID lockdown measures in
Looking ahead to 2023 and beyond, while we continue to see risks and a challenging macro-environment, we expect our supply chain measures to take full effect, resulting in a significant improvement in the conversion of our order book to revenue. Our pricing and increased productivity measures will expand margins. Based on these actions, the strong fundamentals of our businesses, and taking our 2022 outlook into account, we now expect to deliver comparable sales growth of 4-6% and an Adjusted EBITA margin of 14-15% by 2025, with further improvement thereafter.”
Business segment performance
The Diagnosis & Treatment businesses’ comparable sales decreased 4% on the back of 16% comparable sales growth in Q2 2021. High-single-digit growth in Enterprise Diagnostic Informatics and mid-single-digit growth in Image-Guided Therapy was more than offset by a decline in Ultrasound and Diagnostic Imaging, due to specific electronic component shortages. Comparable order intake increased 3% on the back of 29% comparable order intake growth in Q2 2021, with growth across all businesses, reflecting ongoing solid demand for Philips’ portfolio. The Adjusted EBITA margin was 6.2%, mainly due to the decline in sales, cost inflation and an unfavorable mix impact, partly offset by productivity measures.
The Connected Care businesses’ comparable sales decreased 13%, mainly due to the consequences of the Respironics field action and the impact of supply chain headwinds. Comparable order intake showed a 2% decrease, while demand for Hospital Patient Monitoring and Connected Care Informatics remains robust. The Adjusted EBITA margin amounted to 1.1%, mainly due to the decline in sales and cost inflation, partly offset by productivity measures.
Philips’ ongoing focus on innovation and customer partnerships resulted in the following key developments in the quarter:
- Philips signed 19 new long-term strategic partnerships with hospitals in
Europe ,Asia , andNorth America , including a 10-year patient monitoring agreement with a large hospital inGermany . Through Philips’ advanced enterprise monitoring offering, the hospital will transition from stand-alone devices towards a scalable enterprise-wide patient monitoring solution that keeps care teams connected and informed for enhanced patient care management. - Philips received FDA clearance to market its new 7700 3.0T MR system, featuring an enhanced gradient system for Philips’ highest image quality to support a precision diagnosis. Philips also received FDA clearance for its SmartSpeed MR acceleration software, adding AI data collection algorithms to Philips’ existing Compressed SENSE MR engine for higher image resolution with three times faster scan times and virtually no loss in image quality.
- Philips received clearance from the
Chinese National Medical Products Association (NMPA) to launch its helium-free operations MR Ingenia Ambition, which is produced inChina for the Chinese market. Philips is joining forces with B-Soft, a Chinese healthcare informatics company, to develop a healthcare informatics solution tailored to the needs of Chinese hospitals. This highlights the continued progress of Philips’ strategy inChina to drive market-relevant offerings through its local footprint as well as partnerships with the local innovation ecosystem. - Demonstrating the clinical benefits of Philips' minimally invasive therapy options, the company announced positive results from its Tack Optimized Balloon Angioplasty below-the-knee clinical trial. The results show that the Tack endovascular system provides a sustained treatment effect for patients with critical limb ischemia, a severe stage of peripheral arterial disease.
- Building on Philips’ leadership in interventional cardiology solutions, the company launched the latest version of its EchoNavigator image-guidance tool, which seamlessly integrates live ultrasound, interventional X-ray imaging and advanced 3D heart models to help interventional teams treat structural heart disease with greater ease and efficiency.
- Philips signed a long-term agreement with the Rijnstate hospital in
the Netherlands to deliver a wide range of advanced ultrasound devices for 17 different departments at multiple locations of the hospital. The agreement involves ultrasound devices and services for cardiological, vascular or radiological examinations, OB/GYN, as well as mobile devices for the emergency department. - Building on the successful strengthening of the company’s innovative power toothbrushes portfolio, ranging from entry-level to premium propositions, as well as targeted advertising and promotion campaigns,
Philips Oral Healthcare recorded continued strong double-digit comparable sales growth and market share gains inNorth America in the quarter.
Following the FDA’s inspection of certain of Philips Respironics’ facilities in the US in 2021 and the subsequent inspectional observations, the
Capital allocation
In the second quarter, Philips issued
Following the issuance of 14,174,568 new shares related to the share dividend, and the cancellation of 8,758,455 shares that were acquired as part of the
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For further information, please contact:
Ben Zwirs
Philips Global Press Office
Tel.: +31 6 1521 3446
E-mail: ben.zwirs@philips.com
Philips Investor Relations
Tel.: +31 20 59 77055
E-mail: derya.guzel@philips.com
About Royal Philips
Royal Philips (NYSE: PHG, AEX: PHIA) is a leading health technology company focused on improving people's health and well-being, 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
Forward-looking statements and other important information
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This document and the related oral presentation, including responses to questions following the presentation, contain 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 our strategy, estimates of sales growth, future Adjusted EBITA*), future restructuring and acquisition- related charges and other costs, future developments in Philips’ organic business and the completion of acquisitions and divestments. Forward-looking statements can be identified generally as those containing words such as “anticipates”, “assumes”, “believes”, “estimates”, “expects”, “should”, “will”, “will likely result”, “forecast”, “outlook”, “projects”, “may” or similar expressions. 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.
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Presentation
All amounts are in millions of euros unless otherwise stated. Due to rounding, amounts may not add up precisely to the totals provided. All reported data is unaudited. Financial reporting is in accordance with the accounting policies as stated in the Annual Report 2021 except for the adoption of new standards and amendments to standards which are also expected to be reflected in the company's consolidated financial statements for the year ending
Prior-period amounts have been reclassified to conform to the current-period presentation; this includes immaterial organizational changes.
*) Non-IFRS financial measure. Refer to the Reconciliation of non-IFRS information
Source: Royal Philips
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