2020annual results

Innovating to address global health challenges

CEO message

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Message from the CEO

Faced with the COVID-19 pandemic, Philips demonstrated strength and agility, working intensely together with healthcare providers to cope with the challenges for both acute and regular healthcare. At the same time we continued to support people with their personal health. More than ever, we have the potential to accelerate the transformation of healthcare with our innovative solutions.

Frans van Houten

CEO Royal Philips

Dear Stakeholder,

In 2020, Philips again demonstrated its relevance in bringing meaningful innovation to improve people’s health and well-being, as we responded to the COVID-19 pandemic. As a company, we continue to focus on delivering against our triple duty of care – meeting critical customer needs, safeguarding the health and safety of our employees, and ensuring business continuity.

Our employees displayed flexibility and resourcefulness as we more than quadrupled output of acute care equipment and solutions to help frontline healthcare workers diagnose, treat, monitor and manage COVID-19 patients. We significantly increased production of critical care ventilators, provided ICU monitoring & analytics solutions, and rolled out telehealth solutions to relieve the pressure on scarce resources. And our field service engineers worked round the clock to support healthcare providers in their hour of need.

In parallel, we continued to support health systems with the delivery of regular care, entering into multiple long-term strategic partnerships – all featuring result-oriented business models – to transform healthcare by enhancing patient care and improving productivity. We also found new ways to serve consumers seeking to live a healthy life, prevent disease and proactively manage their own health. In total, our products and solutions improved the lives of 1.75 billion people in 2020, including 207 million people in underserved communities.

Overall, our company performance proved resilient. While some of our businesses were affected by lower demand, others were able to significantly increase deliveries. I would like to express my admiration and gratitude for the way in which the extended Philips family – our employees, our suppliers and partners, the Philips Foundation – pulled together with our customers to address the impact of the pandemic.

Affirmation of our strategy

The developments of the past year validate our strategy to innovate the provision of care along the health continuum – putting the patient at the center, improving diagnosis and treatment pathways, enabling the integration of care across care settings, and increasing care provider productivity. At the same time, we help consumers to live healthier lifestyles and to cope with chronic disease. Increasingly, we are able to connect home and hospital care through telehealth platforms. This approach is resonating more strongly than ever.

Customers appreciate the comprehensive and strategic view we take of the future of health and healthcare. They want innovative solutions – smart combinations of systems, devices, informatics, data and services – that can help them deliver on the Quadruple Aim of better health outcomes, improved patient experience, improved staff experience, and lower cost of care. Given the learnings from COVID-19, they are especially keen to discover how we can support care outside the hospital.

In recent years, we have invested significantly in data science, informatics and cloud technology to enable the delivery of integrated solutions across the health continuum, and across care settings. These investments are now paying off, with a rapid increase in adoption of, for example, e-ICU and telehealth solutions that facilitate collaboration between health professionals and patient engagement.

Designed to address customer needs, our health technology innovations – supporting personal health, precision diagnosis, image-guided therapies and connected care, and leveraging the power of data and informatics – continue to generate a growing proportion of solutions-based sales and recurring revenues, which now stand at around 37% of total sales.

Innovating to address global health challenges

In healthcare the world over, we are seeing an increased focus on productivity and outcome-based models, as well as care outside the hospital. COVID-19 has accelerated the digitalization of care and the adoption of telehealth. This shift is being reinforced by global trends such as aging populations, the rise of chronic diseases, and resource constraints.

Innovative health technology can help health systems address these challenges, as well as extend access to care to those in need. The HealthTech market is a very attractive and sizable one, with considerable growth and margin potential, and Philips already holds strong leadership positions in over 65% of our portfolio.

Inspired by our purpose to improve people’s health and well-being, we invest almost 10% of revenue in Research & Development to innovate solutions that make a difference to our customers and society at large. Helping people to stay healthy and prevent disease, for instance through our expanding teledentistry services. Giving clinicians AI-assisted tools like our new Radiology Workflow Suite that help them make precision diagnoses and select the best care pathway. Helping surgeons deliver personalized, minimally invasive treatment with solutions like our constantly evolving Azurion image-guided therapy platform. And outside the hospital – orchestrating and delivering care in lower-cost care settings, helping people to recover, or live with chronic disease, at home.

All of these require a seamless flow of data, which is enabled by our highly secure connected care solutions, such as our IntelliVue MX750/MX850 patient monitors for the ICU. To unlock the full benefits of data-enabled care, we continue to expand our capabilities in informatics and data science, with around half of our R&D professionals working in these areas.

Doing business responsibly and sustainably

In 2020, we underscored our determination to lead by example by renewing our purpose – to improve people’s health and well-being through meaningful innovation, with the aim of improving 2 billion lives per year by 2025, including 300 million in underserved communities, rising to 2.5 billion and 400 million respectively by 2030.

This is part of an enhanced, fully integrated approach to doing business responsibly and sustainably. Building on our strong heritage in environmental and social responsibility, this new framework comprises a comprehensive set of key commitments across the Environmental, Social and Governance (ESG) dimensions that guide our endeavors. I am convinced this is the best way for Philips to create superior, long-term value for our many stakeholders.

I am pleased that we have delivered on all the targets set out in our Healthy people, Sustainable planet 2016-2020 program. As a purpose-driven company, we are conscious of our responsibility towards society and of the need to continue to embed sustainability ever deeper in the way we do business. Having become carbon-neutral in our own operations in 2020, we are now extending our ambitions and working with our partners to ensure that emissions across our entire value chain are in line to limit global warming to the 1.5 °C scenario.

We received further recognition for our efforts in this area in 2020 – achieving a CDP ‘A List’ rating for the eighth consecutive year for our action on climate change, and securing the second-highest place in both the global Dow Jones Sustainability Indices (DJSI) list and The Wall Street Journal’s new ranking, 100 Most Sustainably Managed Companies in the World.

Our performance in 2020

COVID-19 impacted every part of our business in 2020. Nevertheless, despite the challenging circumstances, we were able to execute our plans and return to growth in the second half of the year. For the full year we delivered 3% comparable sales growth^{*^*Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.} and a strong free cash flow^{*^*Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.} of EUR 1.9 billion. Comparable order intake^{**^**Other Key Performance Indicator. For the definition and further information, refer to Other Key Performance Indicators.} increased 9% and we made market share gains in a number of our health systems businesses.

Our Diagnosis & Treatment businesses were impacted by the ongoing postponement of capital equipment installations and routine care, including elective procedures, yet continued to deliver a steady flow of innovations designed to help clinicians deliver a precision diagnosis leading to targeted therapies.

Our Connected Care businesses posted exceptional growth, fueled by COVID-19-related demand for our hospital ventilation and monitoring & analytics solutions.

Our Personal Health businesses had to contend with a steep decrease in consumer demand brought about by the onset of COVID-19, yet rebounded strongly by accelerating online growth, increasing digital engagement, entering into partnerships with leading retailers, and scaling direct-to-consumer business models.

We initiated the process to create a separate legal structure for our Domestic Appliances business within the Philips Group, and we expect to complete this process by Q3 2021.

We made several acquisitions in 2020. For instance, we expanded our image-guided therapy devices portfolio, acquiring Intact Vascular to add an industry-first implantable device to treat peripheral artery disease. We also agreed to acquire BioTelemetry (completed on February 9, 2021) and Capsule Technologies to strengthen our Connected Care segment. These acquisitions will further broaden and scale our patient care management solutions for the hospital and the home, enhance patient outcomes, streamline clinical workflows and increase productivity.

Looking ahead, we continue to see uncertainty related to the impact of COVID-19 across the world. For 2021, Philips plans to deliver low-single-digit comparable sales growth^{*^*Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.}, driven by solid growth in Diagnosis & Treatment and Personal Health, partly offset by lower Connected Care sales, and an Adjusted EBITA margin^{*^*Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.} improvement of 60-80 basis points.

Reflecting our confidence in the future course of the company and the importance we attach to dividend stability, we propose to maintain the dividend at EUR 0.85 per share.

Transforming to create greater value

As we continue our transformation into a customer-first solutions company, we are guided by our strategic roadmap, with its three key imperatives:

Further improving the customer experience and operational excellence
Boosting growth in the core by innovating to extend category leadership, geographic expansion, and deeper customer partnerships
Winning with solutions to support consumers with their personal health, and to help professional healthcare customers achieve the Quadruple Aim.

We aim to drive customer preference by getting even closer to our customers and consumers, making Philips easier to do business with, and further improving our quality, operational excellence and productivity. To do this, we are driving the digital transformation in every area of our business, leveraging our integrated IT landscape – from the way we connect and engage with our customers and consumers to seamlessly connecting our solutions, e.g. to enable remote servicing and upgrades.

In our core business we aim to drive growth through innovation by capturing geographic growth opportunities and by continuing the pivot to consultative customer partnerships and business models, which offer a deeper relationship, with recurring revenue streams.

We will also continue the shift towards integrated solutions with demonstrable clinical evidence and health economic benefits that help our customers achieve the Quadruple Aim. In doing so, we will leverage data science and AI at scale. Where appropriate, we will continue to make acquisitions and enter into partnerships to support our organic growth.

By working in accordance with the Philips Business System and executing on these imperatives with urgency and discipline, we will be able to create more value for our stakeholders – driving customer preference, sustained growth, margin expansion, increased cash flow and improved return on invested capital, while delivering on our ESG commitments.

In conclusion

Once again, I would like to thank our customers, suppliers and partners for working together with Philips in the fight against coronavirus. I also want to express my gratitude to our employees for their commitment, resourcefulness and hard work in difficult circumstances. And I wish to thank our shareholders for the confidence they continue to show in Philips.

Our strategic focus and commitment to improvement remain undiminished. Energized by our purpose and buoyed by the resilience and agility I have seen over the past year, I am confident in Philips’ ability to maintain our transformation momentum, truly impact global health challenges through innovation, and deliver sustained value for our many, diverse stakeholders.

Frans van Houten
Chief Executive Officer

CEO messagePDF74 kB

Our strategy

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Our strategic focus

Driven by purpose

At Philips, our purpose to improve people’s health and well-being through meaningful innovation is at the heart of everything we do. Never has this central tenet been more important than it is now, in these challenging times.

As a leading health technology company, we believe that innovation can improve people's health and healthcare outcomes, as well as making care more accessible and affordable. In concrete terms, we aim to improve the lives of 2 billion people a year by 2025, including 300 million in underserved communities, rising to 2.5 billion and 400 million respectively by 2030.

Guided by this purpose, it is our strategy to lead with innovative solutions that combine systems, smart devices, informatics and services, and leverage big data – helping our customers deliver on the Quadruple Aim (better health outcomes, improved patient experience, improved staff experience, lower cost of care) and helping people to take better care of their health at every stage of life.

We strive to deliver superior, long-term value to our customers and shareholders, while acting responsibly towards our planet and society, in partnership with our stakeholders.

We aim to grow Philips responsibly and sustainably. To this end, we have deployed a comprehensive set of commitments across all the Environmental, Social and Governance (ESG) dimensions that guide the execution of our strategy and support our contribution to UN Sustainable Development Goals 3 (Ensure healthy lives and promote well-being for all at all ages), 12 (Ensure sustainable consumption and production patterns) and 13 (Take urgent action to combat climate change and its impacts).

Our view on healthcare

Health technology is a large market, which is expected to grow by around 4% each year^{*^*Philips-defined 2020-2025 addressable markets, excluding the Domestic Appliances business}. Besides the natural drivers of growth – aging populations, the rise of chronic diseases, increased spending on healthcare in emerging markets – we believe that health technology will be a major growth driver in the years to come.

At Philips, we see healthcare as a continuum, since it puts people’s health journeys front and center and builds upon the idea of integrated care pathways. Believing that healthcare should, and can, be seamless, efficient and effective, we strive to ‘connect the dots’ for our customers and consumers, supporting the flow of data needed to care for people in real time, wherever they are.

Going forward, the digitalization of healthcare and – accelerated by COVID-19 – the more widespread adoption of telehealth will play an increasing role in helping people to live healthily and cope with disease, and in enabling care providers to meet people’s health needs, deliver better outcomes and improve productivity.

Helping our customers address their healthcare challenges

In the consumer domain, we develop innovative solutions that support healthier lifestyles, prevent disease, and help people to live well with chronic illness, also in the home and community settings.

In addition to leveraging retail trade partnerships and new business models, we are accelerating growth through online channels, delivering products and services direct to consumers, and supporting longer-term relationships to maximize the benefit consumers can derive from our solutions.

In clinics and hospitals, we are teaming up with healthcare providers to innovate and transform the way care is delivered. We listen closely to our customers’ needs and together we co-create solutions that help our customers improve outcomes, patient and staff experience and productivity, and so deliver on the Quadruple Aim of value-based care.

Increasingly, we are working together with our health systems customers in novel business models, including outcome-oriented payment models, that align their interests and ours in long-term partnerships. The combination of compelling solutions and consultative partnership contracts, including a broad range of professional services, drives growth rates above the group average, as well as a higher proportion of recurring revenues.

We are embedding AI and data science in our propositions – for instance, applying the power of predictive data analytics and artificial intelligence at the point of care – to leverage the value of data in the clinical and operational domains, aiding clinical decision making and improving the quality and efficiency of healthcare services.

With our global reach, market leadership positions, deep clinical and technological insights, and innovation capability, we are strongly placed to create further value in a changing healthcare world through our propositions in:

Personal health

Delivering solutions that enable healthier lifestyles, personal hygiene and living with chronic disease.

Diagnosis & Treatment

Precision Diagnosis – providing smart, connected systems, optimized workflows, and integrated diagnostic insights, leading to clear care pathways and predictable outcomes
Image Guided Therapy – innovating minimally invasive procedures in a growing number of therapeutic areas, with significantly better outcomes and productivity

Connected Care

Driving better care management by seamlessly connecting patients and caregivers from the hospital to the home.

Our key strategic imperatives and value creation objectives

Our roadmap – with its three strategic imperatives – is our guide as we continue our transformation journey to attain HealthTech industry leadership and drive value creation.

Underpinned by these strategic imperatives, and assuming the world economy will return to growth in 2021, Philips’ targets for accelerated growth, higher profitability and improved cash flow for the 2021–2025 period are:

An acceleration of the average annual Group comparable sales growth^{**^**Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.} to 5-6%, with all business segments within this range. For 2021, Philips aims to deliver low-single-digit Group comparable sales growth^{**^**Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.}, driven by solid growth in Diagnosis & Treatment and Personal Health, partly offset by lower Connected Care sales.
An Adjusted EBITA^{**^**Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.} margin improvement of 60-80 basis points on average annually from 2021, with a target of the high teens for the Group by 2025; Diagnosis & Treatment is targeted to reach 15-17% Adjusted EBITA^{**^**Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.} margin by 2025, Connected Care 17-19%, and Personal Health 19-20%.
Free cash flow^{**^**Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.} above EUR 2 billion by 2025.
Organic Return on Invested Capital (ROIC)^{**^**Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.} of mid-to-high teens by 2025.

The new targets exclude the Domestic Appliances business. As announced in January 2020, Philips is reviewing options for future ownership of its Domestic Appliances business. Philips has started the process of creating a separate legal structure for this business within the Philips Group, which is expected to be completed in the third quarter of 2021.

^*) Philips-defined 2020-2025 addressable markets, excluding the Domestic Appliances business
^**) Non-IFRS financial measure.

New customer partnerships

Philips Annual Report 2020 Caase Studies

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Partnering with customers around the world

Below you will find just a few of the long-term partnerships Philips entered into around the world in 2020 to enhance patient care and improve care provider productivity. Under these agreements, we will deliver innovative solutions to help our customers address the Quadruple Aim of better health outcomes, improved patient experience, improved staff experience, and lower cost of care.

North America

US Department of Veterans Affairs

USA

Philips and the US Department of Veterans Affairs entered a 10-year agreement to expand their tele-critical care program, creating the world’s largest system to provide veterans with remote access to intensive care expertise, regardless of their location.

University of Kentucky HealthCare

USA

University of Kentucky HealthCare teamed up with Philips to implement our tele-ICU technology to enhance patient care and improve utilization and patient flows across 160 ICU beds at the academic medical center’s two hospitals. Leveraging Philips’ acute telehealth platform, eCareManager, UK HealthCare is implementing the state’s first centralized virtual care model to help nurses detect risk of patient deterioration, so they can intervene earlier and help improve care outcomes.

SimonMed Imaging

USA

SimonMed Imaging – one of the largest outpatient medical imaging providers in the US – is partnering with Philips to deploy its most advanced 3T MRI technology, including software and services, at their outpatient practices to enhance diagnoses, from brain injuries, liver and cardiac disease to orthopedic injuries.

Paracelsus Clinics

Germany

Philips entered into an 8-year strategic partnership Paracelsus Clinics, offering solutions that maximize the availability of imaging systems and leverage digitalization and process optimization to realize quality and efficiency improvements.

Marienhospital Stuttgart

Germany

Philips signed a 10-year strategic partnership with Marienhospital Stuttgart to deploy our digital healthcare solutions across multiple departments to improve patient care and efficiency. The project will include renewal and ongoing development of the hospital’s diagnostic imaging equipment and associated IT systems, digitization of its pathology department, and enhancement of the hospital’s emergency medicine capabilities.

Flevo Hospital

Almere, Netherlands

Philips and Flevo Hospital signed a 10-year strategic partnership agreement to support precision diagnosis and optimize workflows and patient pathways, while driving efficiencies and cost optimization.

First Affiliated Hospital of Zhejiang University

Zhejiang, China

Philips signed a multi-year contract with the First Affiliated Hospital of Zhejiang University, one of China's leading hospitals, to support its expansion and upgrading. Combining clinical, research and education, this deal includes Ultrasound, Image Guided Therapy and Monitoring Analytics & Therapeutic Care solutions.

Mandaya Royal Hospital Puri

Tangerang, Indonesia

Philips signed a seven-year strategic partnership agreement with Mandaya Royal Hospital Puri. The turnkey solution includes the next-generation Azurion image-guided therapy system, the Ingenia Ambition MR, and the detector-based IQon Spectral CT, as well as the latest innovations in connected care and informatics.

Buon Ma Thuot University

Vietnam

Philips and Buon Ma Thuot University signed a multi-year strategic partnership agreement on a turn-key smart hospital solution to deliver high-quality healthcare services to Dak Lak and surrounding areas, reducing the need for residents to travel to large cities for healthcare services.

Sustainability highlights

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Progress towards our goals

1.75

2.5

Lives improvedBased on full-year 2020 data

At Philips, we are striving to make the world healthier and more sustainable through innovation, with the goal of improving the lives of 2.5 billion people a year by 2030.

To ensure we remain on track to achieve this goal, we have developed a model, audited externally, that tells us how many lives have been improved by our products and solutions in a given year.

Download our methodology

Lives improved trend line

Lives improved

(in millions)

	2019 Q4	2020 Q1	2020 Q2	2020 Q3	2020 Q4
Lives improved	1.640	1.698	1.710	1.732	1.751

Lives improved in underserved healthcare communities

(in millions)

	2019 Q4	2020 Q1	2020 Q2	2020 Q3	2020 Q4
Lives improved	195	198	201	204	207

Sales from green products and solutions

71%

70%

Sales from circular products and solutions

15%

Operations powered by renewable electricity

100%

Operational waste recycled

90%

Industrial sites sending zero waste to landfill

100%

Reduction in water consumption from 2015 level

20%

10%

All data points refer to 2020

Sustainable use of materials and energy

Reflecting our commitment to SDG 12 (Sustainable consumption and production) and SDG 13 (Climate action), we set specific targets – to be achieved by 2020 – to reduce our environmental impact and help fight climate change. Here you can see how we’ve achieved these goals.

Making the world healthier and more sustainable

In 2020, we successfully completed our Healthy people, Sustainable planet 2016-2020 program, with its focus on access to care, circular economy and climate action, taking us closer to our goal of improving the lives of 2.5 billion people a year by 2030, including 400 million in underserved communities.

Access to care

At the 75th anniversary of the United Nations General Assembly, Philips underlined its commitment to actively engage and partner with stakeholders and other companies to help achieve UN Sustainable Development Goals 3, 12 and 13.
In an example of ecosystem collaboration and technology improving access and quality of care, Philips’ Connected Primary Care Solutions team in Kenya collaborated with Amref University and Philips Foundation to strengthen caregiver capacity by training midwives on the use of the Philips Lumify handheld ultrasound device.
Philips launched an innovative tele-ultrasound collaboration solution powered by Reacts technology to 16 customers in the US and Canada. Verified by a clinical study in rural New Mexico, this solution allowed routine exams on patients of a perinatal clinic to be performed remotely, improving access to care by avoiding travel of up to 100 km for an economically underprivileged population.

Circular economy

Revenues from Circular Products and Solutions increased to 15% (13% in 2019).
Together with 50 global leaders, Philips CEO Frans van Houten signed a pledge to build back a better future, accelerating the transition to a circular economy — creating solutions that combine economic opportunity with benefits to wider society and the environment.
Philips set an environmental milestone with the launch of the Viva Café Eco coffee machine, our first product to have all the visible plastic parts and non-food-contact parts made from recycled materials.

Climate action

Philips, Heineken, Signify and Nouryon formed a consortium and closed the first pan-European virtual Power Purchase Agreement to source renewable electricity from the Mutkalampi windfarm in Finland, which will become operational in 2023.
For the eighth year running, Philips has been placed on the CDP Climate Change A List. We have been recognized for our actions during the last reporting year to reduce emissions, mitigate climate risks and develop the low-carbon economy. Read more

Other highlights

Revenues from Green Products and Solutions advanced to 71% of total revenues (67% in 2019).
Philips continued its top ranking in the Dow Jones Sustainability Indices as it received the maximum scores (100/100) in several categories, including health outcome contribution, environmental reporting, climate strategy, and social reporting categories. Read more
The Wall Street Journal (WSJ) announced Philips as the world’s second most sustainably managed company. Its listing of ‘The 100 Most Sustainably Managed Companies in the World‘ was compiled from a survey of more than 5,500 publicly traded businesses, based on various sustainability metrics and an analysis of media coverage. Read more

Environmental, Social and Governance performance

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Philips' ESG performance at a glance

The dashboard below shows how Philips performed in 2020 on the 21 Core metrics of the WEF ESG reporting framework, mapped across the three dimensions of our ESG commitments, as well as a number of additional metrics that we consider fundamental to the strategy and operation of our business.

Environmental

Green House Gas (GHG) emissions100% electricity from renewable sources0 kilotonnes CO₂-equivalent (net operational carbon footprint)
TCFD implementationDeveloped 2 and 4 °C global warming scenarios and assessed their impact on our supply chain, Philips and customers
Disclosed in separate report
Land use and ecological sensitivity0.5 kilotonnes waste sent to landfill全部 32 个 sites Zero Waste to Landfill
Water consumption and withdrawal in water-stressed areas777,476 m³ total water intake276,615 m³ in water-stressed areas
Circular revenues ^*占收入的 15% of revenues
Closing the loop ^{*^*Philips-specific metric}Closed the loop for all large medical equipment returned to us

Social

Lives Improved ^*17.5 billion, of which 2.07 million in underserved communities
Diversity & Inclusion高层领导职位的 gender diversity in senior leadership positions全体员工的 gender diversity in total workforce79% Employee Engagement Score ^*
Pay equalityPhilips is conducting a pay equality analysis
Working on recognized Certification in Gender Equality
Wage level64.9 亿欧元的 million EUR employee benefit expensesPhilips pays all employees a living wage
Risk for incidents of child, forced or compulsory laborAddressed in Philips GBP, Supplier Sustainability Declaration and Supplier Sustainability program
Health & Safety每百名全职员工的 Total Recordable Case rate per 100 FTEs可记录案例总数为 Total Recordable Cases
Training providedPhilips University 提供 835,575 training hours in Philips University完成 763,371 training completions
Absolute number and rate of employment81,592 employees14% turnover
Supplier development program ^*257 companies302,000 employees impacted
Volunteering ^*2020 年开展的 75 new projects in 2020 reaching 750 million people

Governance

Setting purposePhilips’ purpose is to improve the health and well-being of people through meaningful innovation
Governance body compositionPhilips has a Board of Management and an independent Supervisory Board
Material issues impacting stakeholdersDetailed Materiality Analysis performed
Anti-corruption已完成 14,000 anti-bribery anti-corruption and 65,000 GBP trainings completed
Protected ethics advice and reporting mechanismsWhistleblower mechanism in place
Integrating risk and opportunity in business processesIncluded in Risk Management section
Economic contribution195.35 million EUR revenues758 million EUR dividend declared向 Philips Foundation 捐款 million EUR contribution to Philips Foundation107 million EUR government grants
Financial investment contribution有形资产总计 26.82 million EUR total tangible assets8.02 million EUR capital expenditure
Total R&D expenses19.2 亿欧元 billion EUR invested in R&D (9.8% of revenues)
Total tax contribution33.8 billion EUR

ESG by key countryPDF104 kB

Value creation infographic

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How we create value for our stakeholders

Based on the International Integrated Reporting Council framework, and with the Philips Business System at the heart of our endeavors, we use various resources to create value for our stakeholders in the short, medium and long term.

As we drive our transformation to become a solutions provider to our customers and consumers, we have adopted a single standard operating model that defines how we work together effectively to achieve our company objectives – the Philips Business System (PBS). The PBS integrates key aspects of how we operate:

Our strategy defines our path to sustainable value creation for customers and shareholders.
Clear governance, roles and responsibilities empower people to collaborate and act fast.
Standard processes, systems and practices enable lean and agile ways of working.
We value and develop people and teams, rewarding them for sustainable results.
We live the Philips culture, which sets standards on behaviors, quality and integrity.
Through disciplined performance management and continuous improvement we achieve our goals.

Having a single business system increases speed and agility, and enhances standardization, quality and productivity, while driving a better, more consistent experience for our customers.

Resource inputs

The resources and relationships that Philips draws upon for its business activities

Human

Employees 81,592, 120-plus nationalities, 39% female
Philips University 5,852 courses, 835,575 hours, 763,371 training completions
35,188 employees in growth geographies
Focus on Inclusion & Diversity

Intellectual

Invested in R&D EUR 1.92 billion (Green Innovation EUR 280 million)
Employees in R&D 11,129 across the globe including growth geographies

Financial

Equity EUR 11.9 billion
Net debt^{*^*Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.} EUR 3.7 billion

Manufacturing

Employees in production 39,770
Manufacturing sites 32, cost of materials used EUR 5.2 billion
Total assets EUR 27.7 billion
Capital expenditure EUR 513 million

Natural

Energy used in manufacturing 1,297 terajoules
Water used 777,476 m³
Recycled plastics in our products 1,930 tonnes
'Closing the loop' on all our professional medical equipment by 2025

Social

Philips Foundation
Stakeholder engagement
Volunteering policy

Value outcomes/Societal impact

Value outcomes

Output

The result of the application of the various resources to Philips’ business activities and processes as shaped by the Philips Business System

Human

Employee Engagement Index 79% favorable
Sales per employee EUR 239,423
Safety 185 Total Recordable Cases

Intellectual

New patent filings 876
Royalties EUR 317 million
151 design awards

Financial

Comparable sales growth^{*^*Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.} 2.5%
71% Green Revenues
Adjusted EBITA^{*^*Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.} as a % of sales 13.2%
Free cash flow^{*^*Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.} EUR 1.9 billion

Manufacturing

EUR 14.7 billion revenues from goods sold

Natural

15% revenues from circular propositions
Net CO₂ emissions down to zero kilotonnes
265,000 tonnes (estimated) materials used to put products on the market
Waste 35.5 kilotonnes, of which 90% recycled

Social

Brand value USD 11.7 billion (Interbrand)
Partnerships with UNICEF, Red Cross, Amref and Ashoka

Societal impact

Impact

The societal impact of Philips through its supply chain, its operations, and its products and solutions

Human

Employee benefit expenses EUR 6,490 million, all staff paid a Living Wage
Appointed 74% of our senior positions from internal sources
27% of Leadership positions held by women

Intellectual

Around 60% of revenues from new products and solutions introduced in the last three years
Over 65% of sales from leadership positions

Financial

Market capitalization EUR 39.6 billion at year-end
Long-term credit rating A- (Fitch), Baa1 (Moody's), BBB+ (Standard & Poor's)
Dividend EUR 758 million

Manufacturing

100% electricity from renewable sources

Natural

Environmental impact of Philips operations down to EUR 135 million
32 'zero waste to landfill' sites
First health technology company to have its CO₂ reductions assessed and approved by the Science Based Targets initiative

Social

1.75 billion Lives Improved, of which 207 million in underserved communities
302,000 employees impacted at suppliers participating in the 'Beyond Auditing' program
Total tax contribution EUR 3.38 billion (taxes paid/withheld)
Income tax expense EUR 284 million; the effective income tax rate is 19%

Interactive charts and historical data

Interactive Graphs using key data from the Philips Annual Report 2017

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互动式图表和历史数据

in millions of EUR	2017	2018	2019	2020
Net cash provided by operating activities	1,870	1,780	2,031	2,777
Net capital expenditures	(685)	(796)	(978)	(924)
Free cash flows	1,185	984	1,053	1,852

in millions of EUR	2016	2017	2018	2019	2020
Sales	17,422	17,780	18,121	19,482	19,535
Income from operations	1,464	1,517	1,719	1,644	1,542
Adjusted EBITA	1,921	2,153	2,366	2,563	2,570
Income (loss) from continuing operations	830	1,028	1,310	1,192	1,205
Net income (loss)	1,490	1,870	1,097	1,173	1,195

as a % of sales	2016	2017	2018	2019	2020
Income from operations	8.4%	8.5%	9.5%	8.4%	7.9%
Adjusted EBITA	11%	12.10%	13.10%	13.20%	13.20%

in millions of EUR	2016	2017	2018	2019	2020
Total assets	32,269	25,315	26,019	27,016	27,713
Total provisions and liabilities	18,817	13,292	13,902	14,391	15,812
Shareholders’ equity	12,546	11,999	12,088	12,597	11,870
Market capitalization at year-end	26,751	29,212	28,276	38,775	39,627

in EUR	2016	2017	2018	2019	2020
Adjusted income from continuing operations attributable to shareholders per common share - diluted	1.24	1.54	1.76	1.98	1.98
Income from continuing operations attributable to shareholders per common share - diluted	0.87	1.06	1.37	1.27	1.31
Dividend distributed per common share	0.80	0.80	0.80	0.85	0.85
Share price at year-end	29.00	31.54	34.02	43.52	43.78
Price/earnings ratio	25.89	35.84	24.13	33.22	33.17

	2016	2017	2018	2019	2020
Philips Group	114,731	73,951	77,400	80,495	81,592

% positive score	2016	2017	2018	2019	2020
Philips Group	74	76	74	74	79

in % of total	2016	2017	2018	2019	2020
Philips Group	18	18	19	22	24

per 100 FTEs	2016	2017	2018	2019	2020
Diagnosis & Treatment	0.36	0.27	0.20	0.33	0.27
Connected Care	0.14	0.14	0.13	0.09	0.11
Personal Health	0.17	0.18	0.11	0.13	0.21
Other	0.10	0.14	0.11	0.09	0.06
Philips Group	0.16	0.17	0.13	0.14	0.13

per 100 FTEs	2016	2017	2018	2019	2020
Diagnosis & Treatment	0.65	0.58	0.55	0.61	0.45
Connected Care	1.01	0.61	0.35	0.34	0.31
Personal Health	0.11	0.2	0.14	0.16	0.27
Other	0.27	0.29	0.22	0.24	0.16
Philips Group	0.37	0.36	0.28	0.30	0.24

	2016	2017	2018	2019	2020
Philips Group	0	0	0	0	1

in millions of EUR	2016	2017	2018	2019	2020
Diagnosis & Treatment	4,798	5,168	5,746	6,316	6,373
Connected Care	1,442	2,036	2,330	3,091	3,586
Personal Health	3,951	3,456	3,445	3,681	3,902
Philips Group	10,191	10,660	11,521	13,088	13,861

as a % of total sales	2016	2017	2018	2019	2020
Diagnosis & Treatment	67	70	74	74	78
Connected Care	34	47	54	66	64
Personal Health	71	61	62	63	72
Philips Group	58	60	64	67	71

in millions of EUR	2016	2017	2018	2019	2020
Diagnosis & Treatment	133	99	101	110	122
Connected Care	38	33	36	21	51
Personal Health	96	91	86	99	105
Other	10	10	5	5	2
Philips Group	277	233	228	235	280

in kilotonnes CO₂-equivalent	2016	2017	2018	2019	2020
Logistics	491	641	572	504	429
Business travel	158	145	149	153	71
Non-industrial operations	77	40	40	27	15
Manufacturing	85	55	26	22	20

in kilotonnes CO₂-equivalent	2016	2017	2018	2019	2020
Scope 1	42	38	40	35	32
Scope 2 (market based)	121	58	25	14	3
Scope 2 (location based)	252	225	227	203	182
Scope 3	649	785	721	657	500
Total (scope 1, 2 (market based), and 3)	812	881	786	706	535
Emissions compensated by carbon offset projects	0	220	330	440	535
Net operational carbon emissions in kilotonnes	812	661	456	266	0

in terajoules per million EUR sales	2016	2017	2018	2019	2020
Philips Group	0.15	0.12	0.12	0.11	0.10

in terajoules	2016	2017	2018	2019	2020
Diagnosis & Treatment	627	614	593	547	580
Connected Care	276	278	287	281	229
Personal Health	557	571	586	572	488
Philips Group	1,460	1,463	1,466	1,400	1,297

in thousands of m³	2016	2017	2018	2019	2020
Diagnosis & Treatment	269	312	288	295	286
Connected Care	152	168	161	150	116
Personal Health	542	408	442	445	375
Philips Group	963	888	891	890	777

in Ktonnes	2016	2017	2018	2019	2020
Philips Group	2.9	2.5	1.7	1.3	0.5

in %	2016	2017	2018	2019	2020
Philips Group	79	80	84	83	90

in kilos	2016	2017	2018	2019	2020
Diagnosis & Treatment	428	743	636	104	92
Connected Care	88	49	63	46	20
Personal Health	583	625	394	378	464
Philips Group	1,099	1,417	1,093	528	576

in tonnes	2016	2017	2018	2019	2020
Diagnosis & Treatment	35	48	44	46	44
Connected Care	5	6	6	6	3
Personal Health	89	88	78	62	36
Philips Group	129	142	128	114	83

as a % of all reporting organizations	2016	2017	2018	2019	2020
Philips Group	78	82	83	80	81

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2020 annual results

Amsterdam, February 23, 2021

Innovating to address global health challenges

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Performance highlights