Our 2018 performance at a glance

Philips Group

Key data

in millions of EUR unless otherwise stated

2016 - 2018

2016

2017

2018

Sales

17,422

17,780

18,121

Nominal sales growth

4%

2%

2%

Comparable sales growth1

5%

4%

5%

Income from operations

1,464

1,517

1,719

as a % of sales

8.4%

8.5%

9.5%

Financial expenses, net

(442)

(137)

(213)

Investments in associates, net of income taxes

11

(4)

(2)

Income tax expense

(203)

(349)

(193)

Income from continuing operations

831

1,028

1,310

Discontinued operations, net of income taxes

660

843

(213)

Net income

1,491

1,870

1,097

Adjusted EBITA1

1,921

2,153

2,366

as a % of sales

11.0%

12.1%

13.1%

Income from continuing operations attributable to shareholders2 per common share (in EUR) - diluted3

0.89

1.08

1.39

Adjusted income from continuing operations attributable to shareholders2 per common share (in EUR) - diluted1

1.24

1.54

1.76

Philips Group
Lives improved
in billions
Health continuum

Philips Group

Sales by geographic area

in millions of EUR unless otherwise stated

2016 - 2018

2016

2017

2018

Western Europe

3,756

3,802

3,990

North America

6,279

6,409

6,338

Other mature geographies

1,792

1,707

1,892

Total mature geographies

11,826

11,918

12,221

Nominal sales growth (%)

3.9

0.8

2.5

Comparable sales growth (%)1

3.3

1.9

3.3

Growth geographies

5,596

5,862

5,901

Nominal sales growth (%)

3.2

4.8

0.7

Comparable sales growth (%)1

8.4

8.0

7.6

Philips Group

17,422

17,780

18,121

Philips Group

Income from operations and Adjusted EBITA

in millions of EUR unless otherwise stated

2016 - 2018

'16

'17

'18

Amortization and impairment in value

243

269

347

Adjusted items

214

366

300

EBIT in value

1,464

1,517

1,719

Adjusted EBITA as a % of sales

11.0%

12.1%

13.1%

Adjusted EBITA in value

1,921

2,153

2,366

Philips Group

Green Revenues per segment

in millions of EUR unless otherwise stated

2016-2018

'16

'17

'18

Personal Health

3,951

4,237

4,444

Diagnosis & Treatment

4,798

5,096

5,332

Connected Care & Health Informatics

1,442

1,373

1,769

As a % of sales

58.5%

60.2%

63.7%

Philips Group

Research and development expenses

in millions of EUR unless otherwise stated

2016 - 2018

2016

2017

2018

Diagnosis & Treatment

629

715

756

Connected Care & Health Informatics

388

399

371

Personal Health

412

415

425

Other

240

235

207

Philips Group

1,669

1,764

1,759

As a % of sales

9.6%

9.9%

9.7%

Philips Group

Net operational carbon footprint

in kilotonnes CO2 -equivalent

2014 - 2018

2014

2015

2016

2017

2018

Net operational carbon footprint

743

757

821

627

436

Philips Group

Performance

in millions of EUR

2017 - 2018

2017

2018

% change

Sales

17,780

18,121

2%

Green Revenues

10,706

11,545

8%

Sales in mature geographies

11,918

12,221

3%

Sales in growth geographies

5,862

5,901

1%

Personal Health

Performance

in millions of EUR

2017 - 2018

2017

2018

% change

Sales

7,310

7,228

(1)%

Green Revenues

4,237

4,444

5%

Sales in mature geographies

4,371

4,327

(1)%

Sales in growth geographies

2,939

2,901

(1)%

Diagnosis & Treatment

Performance

in millions of EUR

2017 - 2018

2017

2018

% change

Sales

6,891

7,245

5%

Green Revenues

5,096

5,332

5%

Sales in mature geographies

4,566

4,829

6%

Sales in growth geographies

2,325

2,416

4%

Connected Care & Health Informatics

Performance

in millions of EUR

2017 - 2018

2017

2018

% change

Sales

3,163

3,084

(3)%

Green Revenues

1,373

1,769

29%

Sales in mature geographies

2,705

2,624

(3)%

Sales in growth geographies

458

460

0%

Management summary

  • Sales rose to EUR 18.1 billion, a nominal increase of 2%, which reflected 5% nominal growth in the Diagnosis & Treatment businesses, a 3% sales decline in the Connected Care & Health Informatics businesses and a 1% decline in the Personal Health businesses. On a comparable basis**Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information. the 5% growth reflected 7% growth in the Diagnosis & Treatment businesses, higher IP royalty income, 3% growth in the Personal Health businesses, and flat sales in the Connected Care & Health Informatics businesses.
  • Net income amounted to EUR 1.1 billion, a decrease of EUR 773 million compared to 2017, mainly due to the deconsolidation of Signify (formerly Philips Lighting). Net income is not allocated to segments as certain income and expense line items are monitored on a centralized basis.
  • 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. totaled EUR 2.4 billion, or 13.1% of sales, an increase of EUR 213 million, or 100 basis points as a % of sales, compared to 2017. The productivity programs delivered annual savings of approximately EUR 466 million, ahead of the targeted savings of EUR 400 million, and included approximately EUR 269 million procurement savings, led by the Design for Excellence (DfX) program, and EUR 197 million savings from other productivity programs.
  • Net cash provided by operating activities amounted to EUR 1.8 billion, a decrease of EUR 90 million compared to 2017, as higher earnings were offset by higher working capital outflows. 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. amounted to EUR 984 million, which includes a EUR 176 million outflow related to pension liability de-risking and an early bond redemption.
  • On June 28, 2017, Philips announced a EUR 1.5 billion share buyback program for capital reduction purposes. Under that program, which was initiated in the third quarter of 2017, Philips repurchased shares in the open market and entered into a number of forward transactions, some of which are to be settled in Q2 2019. As the program was initiated for capital reduction purposes, Philips intends to cancel all of the shares acquired under the program.
  • On January 29, 2019, Philips announced a new share buyback program for an amount of up to EUR 1.5 billion. Philips started the program in the first quarter of 2019 and expects to complete it within two years. As the program was initiated for capital reduction purposes, Philips intends to cancel all shares acquired under the program. The program will be executed by an intermediary to allow for purchases in the open market during both open and closed periods.
  • As of December 31, 2018, Philips’ shareholding in Signify (formerly Philips Lighting) was 16.5% of Signify's issued share capital. For further information, refer to Sell-down Signify shares (former Philips Lighting).

Download our Annual Report 2018

Complete reports

Report selections

Receive hard copy

All holders of Philips securities can receive a hard copy of the complete audited financial statements free of charge by submitting a request toannual.report@philips.com

Message from the CEO

Our transformation into a customer-centric solutions company is gathering momentum, and with our focus on innovation and continuous improvement we will unlock further value.
Frans van Houten
CEO Royal Philips

Dear Stakeholder,

In 2018 we made further progress on our journey to extend our leadership as a health technology company. In my frequent meetings with our hospital customers, they tell me how they appreciate our strategy and are keen to engage with us. They want to know more about our innovative solutions – suites of systems, smart devices, software and services – that can help them deliver on the Quadruple Aim of improved patient experience, better health outcomes, improved staff experience, and lower cost of care. At the same time, we see a real interest among consumers, healthcare professionals, insurers and policy makers to help people towards a healthier lifestyle and support primary and secondary prevention of health challenges. We see this as a validation of our strategy to drive technology innovation along the health continuum and disease pathways. As a result, we have seen growing demand for our products and solutions, an increase in long-term strategic partnerships, and substantial growth of order intake.

With comparable sales growth of 5%**Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information. and the 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 improving by 100 basis points to 13.1% in 2018, we continue to deliver on our financial targets. Having said that, our performance at segment level shows we still have scope for further improvement. Our Diagnosis & Treatment businesses had a very good year in terms of sales growth, order intake growth and improved earnings. At Connected Care & Health Informatics, topline growth was flat and we continued to make substantial investments in R&D, but the expanding order book gives us confidence we are on the right path to boost growth. Personal Health had a slower year, in part due to internal execution challenges, but we have taken decisive action. We are confident about the road ahead, given the exciting array of innovative new products and services we are bringing onto the market. We also made a number of complementary acquisitions in 2018 to strengthen businesses across our portfolio.

In light of the continuous performance improvement over the last three years and the strength of our balance sheet, we propose to increase the dividend by 6%.

While the current geopolitical and macroeconomic uncertainty is a challenge, we are making progress with our ‘self-help’ initiatives to address headwinds such as trade tariffs and emerging-market currency volatility, for instance by adjusting our supply base, leveraging our multi-modality factories, and extending our productivity plans. Last year I wrote that making further progress on product performance and quality was our highest priority for 2018. We continue to invest substantially in driving quality and compliance, and while there is still work to do, we are starting to reap the benefits of our improvement efforts, positioning us well for the future.

Transforming healthcare through innovation

Meeting the growing demand and improving the delivery of care while containing costs – that is the very substantial challenge faced by health systems around the world. It is driving the shift towards value-based care, the consolidation of hospitals into Integrated Delivery Networks, and the consumerization of healthcare, as well as increasing the importance of preventative care, early disease detection, and the management of chronic disease outside the hospital.

Innovative health technology is helping to transform healthcare, supporting improved outcomes as well as productivity gains. The growing role of data, informatics and Artificial Intelligence (AI) is having a major impact, principally in the areas of precision diagnosis, clinical decision support, care orchestration, telehealth and, not least, in helping consumers to live a healthy life or cope with chronic disease. In this market, which has attractive growth rates and profit pools, we have strong positions across the health continuum.

At Philips, we believe in integrated, connected care – connecting consumers/patients, providers and payers more effectively and leveraging informatics for better outcomes at lower cost.

We enable clinicians to make precision diagnosis and deliver personalized, minimally invasive therapies through our digital imaging and clinical informatics solutions. A shining example is our Azurion image-guided therapy platform, which has secured a +300 basis points gain in market share and over 1,000 orders since its launch in 2017.

We empower care professionals with healthcare informatics solutions like our IntelliSpace Portal data integration, visualization and analysis platform for enhanced diagnostic confidence, and monitoring, predictive analytics solutions like our IntelliVue Guardian with Early Warning Scoring, which enables nursing staff to identify patients whose condition may be deteriorating rapidly.

We enable people to recover, or live with chronic disease, at home, thanks to solutions such as our new Trilogy Evo home ventilation platform plus Care Orchestrator cloud-based management system. Likewise, we enable people to stay healthy and prevent disease by means of connected products like our Pregnancy+ parenting app and our Sonicare DiamondClean electric toothbrush with Sonicare app, which includes teledentistry and automatic brush-head reordering services.

Joining up the dots from the ICU to the home, our HealthSuite platforms support the seamless flow of data needed to care for people in real time, wherever they are.

Our innovation strength has been key to these transformational solutions, and I am convinced there is even better to come. We continue to maintain a high level of investment in R&D, with a strong focus on software and data science, and we now apply the Quadruple Aim as a guide in all our development choices, so that our innovations have maximum impact and are fully scalable.

Delivering on our sustainability commitments

Reflecting our commitment to the United Nations’ Sustainable Development Goals, we continue to embed sustainability deeper in the way we do business. With its focus on access to care, circular economy and climate action, our ‘Healthy people, Sustainable planet’ program is the vehicle that will enable us to deliver on these commitments. In December 2018, Philips became the world’s first health technology company to have its CO2 emission targets approved by the Science Based Targets initiative. Our sustainability performance received renewed recognition when – in the first year since our reclassification to the Health Care Equipment & Services industry group – we took second place in the 2018 Dow Jones Sustainability Index. With health systems the world over increasingly keen to reduce their environmental footprint, we remain convinced that sustainability can be a key competitive differentiator.

Roadmap to win

With our transformation into a customer-first solutions company gathering pace, we have identified three main drivers of continued growth and improved profitability: Better serve customers and improve quality; Boost growth in core business; Win with solutions along the health continuum.

We believe that by engaging more deeply with our customers and consumers, making it easier for them to do business with us, developing more compelling solutions, and acting with increased agility, speed and efficiency, we will deliver greater value for all our stakeholders.

This means making a big step up in quality, operational excellence and productivity, and continuing to drive the digital transformation in every area of our business. It means capturing geographic growth opportunities and pivoting to consultative customer partnerships and business models that offer a much deeper relationship, with recurring revenue streams. In that regard, our multi-year ‘patient monitoring as a service’ agreement with Miami's Jackson Health System and our medical technology partnership agreements with Children’s Health hospital in Dallas and Munich Municipal Hospital are a blueprint for the way to go. It also means continuing the shift from products to innovative value-added, integrated solutions, supported by organic growth and disciplined M&A.

Together, these measures will drive sustained performance improvement as we pursue our overall targets of 4-6% 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 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 100 basis points on average per year for the period 2017–2020. We also expect to increase the annual 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. to above EUR 1.5 billion by 2020.

In the end, culture is foundational to our strategic ambitions. At Philips we place five key elements high on our culture agenda: putting customers first, acting with quality and integrity, teaming up to win, taking ownership to deliver fast, and improving and inspiring each other. These behaviors create a shared understanding of how we all need to act in order to delight the customer and drive market success.

In conclusion

On a personal note, I would like to thank our customers, shareholders and other stakeholders for the confidence they have shown in Philips over the past year. I would also like to thank our employees for their hard work and dedication, as we seek to combine day-to-day performance with a profound, customer-focused transformation.

Pleased with the progress we are making, yet conscious that we still have a way to go, I strongly believe that the combination of our sense of purpose, innovation strength, culture of customer centricity and deep commitment to continuous improvement is a potent recipe for Philips to win and make the world healthier and more sustainable.

Frans van Houten
Chief Executive Officer

Transforming healthcare through innovation

The case studies below are just a few examples of how our long-term strategic partnerships and innovative solutions are helping healthcare providers address the Quadruple Aim of improved patient experience, better health outcomes, improved staff experience, and lower cost of care. At the same time, our connected consumer products are helping people the world over to take better care of their health.

Reducing hospital readmissions with remote patient care management

West Moreton Health, Queensland, Australia

Philips Mobile Enabled Care (MeCare)

Our clinicians can now intervene early if a patient’s health is showing signs of deterioration.

Melinda Parcell 
Executive Director Community and Rural Services,
West Moreton Health

  • 28% decrease in potentially preventable hospitalizations in chronically ill patients1
  • 53% decrease in hospital emergency department visits for these patients2

West Moreton Health is pioneering the use of remote patient care management to help chronically ill patients achieve better health and stay out of hospital. 

Philips and West Moreton Health developed Mobile Enabled Care (MeCare), an innovative program that combines technology, in-home support and education to empower patients and help enable early intervention when needed.

1Compared to a baseline average of potentially preventable hospitalizations without the MeCare program.
2Compared to a pre-MeCare trend. Without intervention through MeCare, the emergency department visits for this group were predicted to continue to increase.

Unlocking the full potential of digital pathology for primary diagnostics

AZ Sint-Jan, Bruges, Belgium

Philips digital pathology solutions

Digital pathology enhances clinical confidence in our findings by delivering the right result the first time.

Dr. Ivo van den Berghe 
Director of surgical pathology

  • Quicker processing
    of laboratory test
  • Easy to share information
    for multidisciplinary use
  • Lower risk of reporting on wrong patient samples
  • Improved ergonomic conditions for laboratory staff

Using Philips digital pathology solutions, the Anatomical Pathology laboratory of AZ Sint-Jan hospital in Bruges was the first in Belgium to digitize workflow for primary diagnostics.

Reducing procedure time in image-guided therapy with Philips Azurion

St. Antonius Hospital, The Netherlands

Philips Azurion

With Philips Azurion, we now have the ability to treat one more patient a day, with no compromise to patient safety or quality of care.

Marco van Strijen 
MD – Interventional Radiologist at St. Antonius Hospital

  • 12% reduction
    in patient preparation time
  • 17% reduction
    in procedure time
  • 28% reduction on post-procedure lab time

St. Antonius Hospital was one of the first hospitals in the world to install Philips Azurion, the next-generation image guided-therapy platform. An independently verified study shows that St. Antonius Hospital has achieved significant improvements in workflow with the new interventional lab.

Discover more on the website

Results are specific to the institution where they were obtained and may not reflect the results achievable at other institutions.

Empowering nurses to be able to make critical interventions

Saratoga Hospital, New York, US

Philips IntelliVue MP5SC patient monitors

The early warning scoring system helps us better identify patients at risk and, most importantly, respond to those patients earlier.

Mary Jo LaPosta, MS, PhD, RN
Senior Vice President, Saratoga Hospital

  • 66% of cardiac arrest patients show abnormal signs and symptoms up to 6 hours prior to cardiac arrest, but physicians are only notified 25% of the time1
  • 63% reduction in patient transfers to the ICU within its 20-bed orthopedic unit, which dropped from three or four codes per year to zero2

Internal research on patient events uncovered a need for more support of nursing staff as they dealt with patient events outside of the ICU. Our solution supports clinicians in identifying and responding to patient events with the help of Philips IntelliVue MP5SC patient monitors and IntelliVue Guardian early warning scoring.

1Franklin C, Mathew J. Developing strategies to prevent in hospital cardiac arrest: analyzing responses of physicians and nurses in the hours before the event. Crit Care Med. 1994;22(2):244-247
2Based on results collected from 2015 to 2018. Results are specific to the institution where they were obtained and may not reflect the results achievable at other institutions.

Ingenia Ambition 1.5T MRI with BlueSeal magnet and Compressed SENSE acceleration

RadNet, US

Philips Ingenia Ambition

The key to the Philips Compressed SENSE implementation is that it is universally applicable to all 2D & 3D scans as well as all body parts – that makes an enormous difference.

Dr. Lawrence Tanenbaum 
Medical Director of RadNet, USA

  • <0.5% of the helium
    of a conventional system1
  • ~900 kg lighter magnet
    than its predecessor1
  • >5 more patients per day within the same scanning hours with Compressed SENSE3

With its revolutionary, fully sealed BlueSeal magnet, Ingenia Ambition enables more productive1, helium-free MR operations, reducing the chance of potentially lengthy and costly disruptions, and virtually eliminating dependency on a commodity with an unpredictable supply. The fully sealed system does not require a vent pipe, significantly reducing the typical MR siting challenges and lowering construction costs. 

The Ingenia Ambition delivers superb image quality, even for challenging patients, and performs MRI exams up to 50% faster with Compressed SENSE acceleration for all anatomies in both 2D- and 3D scanning2.

Discover more on the website

1Compared to the Ingenia 1.5T ZBO magnet
2Compared to Philips scans without Compressed SENSE
3Radiologie Dr Wagner, Göttingen, Germany. Results from case studies are not predictive of results in other cases. Results in other cases may vary.

DreamMapper app

Philips DreamMapper app
  • 10% of the world’s adult population suffers from sleep apnea, but many struggle to stick with their therapy.
  • 58% more people used their therapy every night when they used DreamMapper1
  • 283% higher success rate
    for DreamMapper users struggling with adherence to sleep therapy1

The DreamMapper app helps motivate people living with sleep apnea to improve their adherence to treatment by providing tools and real-time tracking and analysis of their PAP (positive airway pressure) therapy from Philips devices.

1Retrospective review conducted by Philips Respironics of the EncoreAnywhere database

Making the world healthier and more sustainable

Switch orientation

Please switch to landscape format to view this content

Compare our key data from the last five years

Statement of income
Profitability
Balance sheet
Cash flow
Key figures per share
Employees
Sustainability

Balance Sheet

Bar chart
Line chart
Swap key figures / years
Swap key figures / years
Download XLS

The years 2013, 2014, 2015 and 2016 include Philips Lighting

2014

2015

2016

2017

2018

Sales

14,517

16,806

17,422

17,780

18,121

Income from operations

461

658

1,464

1,517

1,719

Adjusted EBITA

1,458

1,688

1,921

2,153

2,366

Income (loss) from continuing operations

260

160

831

1,028

1,310

Net income (loss)

408

638

1,491

1,870

1,097

Philips Group

Operating cash flows

[unittitle]

[datatitle]

'16

'17

'18

Net cash provided by operating activities

1,170

1,870

1,780

Net capital expenditures

(741)

(685)

(796)

Free cash flows

429

1,185

984

Philips Group

PL

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Sales

14,517

16,806

17,422

17,780

18,121

Income from operations

461

658

1,464

1,517

1,719

Adjusted EBITA

1,458

1,688

1,921

2,153

2,366

Income (loss) from continuing operations

260

160

831

1,028

1,310

Net income (loss)

408

638

1,491

1,870

1,097

Personal Health

Sales/EBIT/EBITA 

[unittitle]

[datatitle]

2016

2017

2018

Sales

7,099

7,310

7,228

Income from operations

953

1,075

1,045

Adjusted EBITA

1,108

1,221

1,215

Diagnosis & Treatment

Sales/EBIT/EBITA 

[unittitle]

[datatitle]

2016

2017

2018

Sales

6,686

6,891

7,245

Income from operations

546

488

600

Adjusted EBITA

631

716

838

Connected Care & Health Informatics

Sales/EBIT/EBITA

[unittitle]

[datatitle]

2016

2017

2018

Sales

3,158

3,163

3,084

Income from operations

275

206

179

Adjusted EBITA

324

372

341

Philips Group

Profitability

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Income from operations

3.2%

3.9%

8.4%

8.5%

9.5%

Adjusted EBITA

10.0%

10.0%

11.0%

12.1%

13.1%

Personal Health

Profitability

[unittitle]

[datatitle]

2016

2017

2018

Income from operations

13.4%

14.7%

14.5%

Adjusted EBITA

15.6%

16.7%

16.8%

Diagnosis & Treatment

Profitability

[unittitle]

[datatitle]

2016

2017

2018

Income from operations

8.2%

7.1%

8.3%

Adjusted EBITA

9.4%

10.4%

11.6%

Connected Care & Health Informatics

Profitability

[unittitle]

[datatitle]

2016

2017

2018

Income from operations

8.7%

6.5%

5.8%

Adjusted EBITA

10.3%

11.8%

11.1%

Philips group

Balance sheet

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Total assets

28,317

30,943

32,270

25,315

26,019

Total provisions and liabilities

17,384

19,218

18,817

13,292

13,902

Shareholders’ equity

10,832

11,607

12,546

11,999

12,088

Market capitalization at year-end

22,082

21,607

26,751

29,212

28,276

Philips Group

Figures per common share

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Sales per common share

15.86

18.35

18.98

19.14

19.63

Income (loss) from continuing operations per share

0.28

0.17

0.90

1.10

1.41

Dividend distributed per common share

0.80

0.80

0.80

0.80

0.80

Share price at year-end

24.15

23.56

29.00

31.54

34.02

Price/earnings ratio

96.60

53.55

25.89

35.84

24.13

Philips Group

Employees

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Total employees at year-end

113,678

112,959

114,731

73,951

77,400

Engagement index (% positive score)

72%

71%

74%

76%

74%

[sectortitle]

Green Revenues, in million of euros

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Personal Health

2,937

3,521

3,951

4,237

4,444

Diagnosis & Treatment

3,858

4,670

4,798

5,096

5,332

Connected Care & Health Informatics

856

1,258

1,442

1,373

1,769

Philips Group

7,651

9,449

10,191

10,706

11,545

[sectortitle]

Green Revenues, as a % of total sales

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Personal Health

49

52

56

58

62

Diagnosis & Treatment

73

72

72

74

74

Connected Care & Health Informatics

32

42

46

43

57

Philips Group

53

56

58

60

64

[sectortitle]

Green Innovation, in million of euros

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Personal Health

97

99

96

91

86

Diagnosis & Treatment

68

103

133

99

101

Connected Care & Health Informatics

22

18

38

33

36

Other

21

21

10

10

5

Philips Group

208

241

277

233

228

[sectortitle]

Operational Carbon Footprint, in kilotonnes CO2-equivalent

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Manufacturing

84

87

85

55

26

Non-industrial operations

65

58

77

40

40

Business travel

147

152

158

135

137

Logistics

447

460

501

617

563

[sectortitle]

Operational carbon footprint by Greenhouse Gas Protocol scopes, in kilotonnes CO2-equivalent

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Scope 1

40

39

42

38

40

Scope 2

109

106

121

58

26

Scope 3

594

612

658

751

700

Philips Group

743

757

821

847

766

Scope 2 (location based)

210

212

252

225

227

[sectortitle]

Operational energy efficiency, in terajoules per million EUR sales

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Philips Group

0.41

0.35

0.33

0.27

0.28

[sectortitle]

Total energy consumption in manufacturing, in terajoules

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Personal Health

1,352

1,389

1,436

1,464

1,508

Diagnosis & Treatment

1,202

1,214

1,316

1,298

1,237

Connected Care & Health Informatics

334

336

318

310

315

Philips Group

2,888

2,939

3,070

3,072

3,060

[sectortitle]

Water intake, in thousands of m3

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Personal Health

585

614

613

496

533

Diagnosis & Treatment

392

268

269

312

288

Connected Care & Health Informatics

74

94

81

80

70

Philips Group

1,051

976

963

888

891

[sectortitle]

Zero waste to landfill, in Ktonnes

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Philips Group

3.2

2.9

2.5

1.7

[sectortitle]

Materials provided for recycling via external contractor per total waste, in %

 

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Philips Group

77

78

79

80

84

[sectortitle]

Hazardous substances emissions, in kilos

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Personal Health

789

642

670

456

Diagnosis & Treatment

604

428

743

636

Connected Care & Health Informatics

26

29

4

1

Philips Group

1,419

1,099

1,417

1,093

[sectortitle]

VOC emissions, in tonnes

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Personal Health

138

92

92

83

Diagnosis & Treatment

29

35

48

44

Connected Care & Health Informatics

2

2

2

2

Philips Group

169

129

142

128

[sectortitle]

ISO 14001 certification, as a % of all reporting organizations

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Philips Group

73

75

78

82

83

[sectortitle]

Female executives, in % of total

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Philips Group

15

19

18

18

19

[sectortitle]

Lost Workday Injuries, per 100 FTEs

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Personal Health

0.16

0.16

0.15

0.17

0.11

Diagnosis & Treatment

0.27

0.20

0.36

0.27

0.20

Connected Care & Health Informatics

0.18

0.16

0.15

0.15

0.16

Other

0.11

0.13

0.10

0.14

0.11

Philips Group

0.15

0.15

0.16

0.17

0.13

[sectortitle]

Total recordable cases, per 100 FTEs

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Personal Health

0.33

0.28

0.19

Diagnosis & Treatment

0.65

0.58

0.55

Connected Care & Health Informatics

0.67

0.60

0.30

Other

0.27

0.29

0.22

Philips Group

0.37

0.36

0.28

[sectortitle]

Fatalities

[unittitle]

[datatitle]

2014

2015

2016

2017

2018

Philips Group

1

0

0

0

0

Creating value for our stakeholders

With the Philips Business System at the heart of our endeavors, we apply six forms of capital in our processes, to deliver a range of outcomes

Capital input

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

Human

  • Employees 77,400, 120 nationalities, 38% female
  • Philips University 1,200 new courses, 700,000 hours, 550,000 training completions
  • 29,977 employees in growth geographies
  • Focus on Inclusion & Diversity

Intellectual

  • Invested in R&D EUR 1.76 billion (Green Innovation EUR 228 million)
  • Employees in R&D 10,528 across the globe including growth geographies

Financial

  • Equity EUR 12.1 billion
  • Net debt*) EUR 3.1 billion

Manufacturing

  • Employees in production 30,925
  • Manufacturing sites 39, cost of materials used EUR 4.8 billion
  • Total assets EUR 26.0 billion
  • Capital expenditure EUR 422 million

Natural

  • Energy used in manufacturing 3,062 terajoules
  • Water used 891,000 m3
  • Recycled plastics in our products 1,840 tonnes
  • 19 'zero waste to landfill' sites
  • Pledge to take back all medical equipment by 2025

Social

  • Philips Foundation
  • Stakeholder engagement
  • New volunteering policy

Philips Business System

With its four interlocking elements, the Philips Business System (PBS) is designed to help us deliver on our mission and vision – and to ensure that success is repeatable. As we execute our strategy and invest in the best opportunities, leverage our unique strengths and become operationally excellent, we will be able to consistently deliver value to our customers, consumers, shareholders, and other stakeholders.

Strategy - Where we invest

We manage our portfolio with clearly defined strategies and allocate resources to maximize value creation.

Capabilities, Assets and Positions - Our unique strengths

We strengthen and leverage our core Capabilities, Assets and Positions as they create differential value: deep customer insight, technology innovation, our brand, global footprint, and our people.

Excellence - How we operate

We are a learning organization that applies common operating principles and practices to deliver to our customers with excellence.

Path to Value - What we deliver

We define and execute business plans that deliver sustainable results along a credible Path to Value.

The six capitals

Human

We employ diverse and talented people and give them the skills and training they need to ensure their effectiveness and their personal development and employability.

Intellectual

We apply our innovation and design expertise to create new products and solutions that meet local customer needs.

Financial

We generate the funds we need through our business operations and where appropriate raise additional financing from capital providers.

Manufacturing

We apply Lean techniques to our manufacturing processes to produce high-quality products. We manage our supply chain in a responsible way.

Natural

We are a responsible company and aim to minimize the environmental impact of our supply chain, our operations, and also our products and solutions.

Social

We contribute to our customers and society through our products and solutions, our tax payments, the products and services we buy, and our investments in local communities.

Value outcomes

Output

The result of the application of the six forms of capital to Philips’ business activities and processes as shaped by the Philips Business System

Human

  • Employee Engagement Index 74% favorable
  • Sales per employee EUR 234,121

Intellectual

  • New patent filings 1,120
  • IP Royalties Adjusted EBITA*) EUR 272 million
  • 141 design awards

Financial

  • Comparable sales growth*) 5%
  • 64% Green Revenues
  • Adjusted EBITA*) as a % of sales 13.1%
  • Net cash provided by operating activities EUR 1.8 billion
  • Net capital expenditures EUR 796 million

Manufacturing

  • EUR 18.1 billion revenues from products and solutions sold

Natural

  • 12% revenues from circular propositions
  • Net CO2 emissions down to 436 kilotonnes
  • 257,000 tonnes (estimated) materials used to put products on the market
  • Waste down to 24.5 kilotonnes, of which 84% recycled

Social

  • Brand value USD 12.1 billion (Interbrand)
  • Partnerships with UNICEF, Red Cross, Amref and Ashoka

Societal impact

Impact

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

Human

  • Employee benefit expenses EUR 5,287 million
  • Appointed 77% of our senior positions from internal sources
  • 21% of Leadership positions held by women

Intellectual

  • Around 40% of revenues from new products and solutions introduced in the last three years

Financial

  • Market capitalization EUR 28.3 billion at year-end
  • Long-term credit rating A- (Fitch), Baa1 (Moody's), BBB+ (Standard & Poor's)
  • Dividend EUR 738 million

Manufacturing

  • 90% electricity from renewable sources
  • 240,000 employees impacted at suppliers participating in the 'Beyond Auditing' program

Natural

  • Environmental impact Philips operations down to EUR 175 million
  • 1st health technology company to have its CO2 reductions assessed and approved by the Science Based Targets initiative

Social

  • 1.54 billion Lives Improved (2.24 billion including Signify), of which 175 million in underserved communities
  • Income tax paid EUR 301 million; the geographic statutory income tax rate is 25% of the result before tax
*Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.

Our strategic focus

Healthcare challenges the world over

All around the world, trends such as growing, aging populations, the increase in chronic illnesses and changing reimbursement systems have created a need for more efficient, effective and sustainable models of care. At the same time, a growing focus on healthy living and prevention means people are looking for new ways to monitor and manage their health. In underserved communities, meanwhile, access to care remains a pressing issue.

LumifyDreamwear

A clear vision guiding our actions

Led by our vision of making the world healthier and more sustainable through innovation, Philips is driving the digital health revolution to unlock the value of seamless care, helping people to look after their health at every stage of life – with the goal of improving the lives of 3 billion people a year by 2025.

This ambition demands an approach that addresses both the social and ecological dimensions, as reflected in our commitment to the United Nations’ Sustainable Development Goals 3, 12 and 13:

  • Ensure healthy lives and promote well-being for all at all ages
  • Ensure sustainable consumption and production patterns
  • Take urgent action to combat climate change and its impacts

With its focus on access to care, circular economy and climate action, our ‘Healthy people, Sustainable planet’ program, running from 2016-2020, is designed to help us deliver on these commitments.

Innovating care

The desire for affordable and effective healthcare delivery, without compromising the future availability of natural resources, is driving the adoption of value-based care. This will first require a shift from volume to value, which Philips is driving through innovation, as well as by transforming the way we engage with customers and shape business models. Secondly, it will require the balance to shift from acute and episodic care more towards primary and secondary preventative care in the community and home, improving overall population health.

At Philips, we like to visualize healthcare as a continuum since it puts people at the center and supports the idea of care pathways. Believing that healthcare should be seamless, efficient and effective, we ‘join up the dots’ for our customers and consumers. Data and informatics will play an ever-increasing role in helping people to live healthily and/or cope with disease, and in enabling care providers to meet people’s needs, deliver better outcomes and improve productivity.

Health continuum

Applying our extensive consumer insights, we develop locally relevant, connected solutions that support healthier lifestyles, prevent or cure disease, and help people to live well with chronic disease, also in the home and community settings. In hospitals, we are teaming up with healthcare providers in long-term strategic partnerships to innovate and transform the way care is delivered.

SonicareTelehealth eICUDiagnostic Imaging

We listen closely to our customers’ needs and together we co-create solutions – suites of systems, smart devices, software and services that drive improvements in patient outcomes, quality of care delivery and cost productivity. Increasingly, we are partnering with our customers in new business models where we take co-responsibility for our customers’ key performance indicators.

Integrated solutions addressing the Quadruple Aim

Philips sees significant value in integrated healthcare, applying the power of predictive data analytics and artificial intelligence at the point of care, while at the same time optimizing care delivery across the health continuum. This includes an increased focus on both primary and secondary prevention and population health management programs.

With our global reach, deep insights and innovative strength, we are uniquely positioned in ‘the last yard’ to consumers and care providers, delivering:

  • connected products and services supporting the health and well-being of people
  • integrated modalities and clinical informatics to deliver precision diagnosis
  • real-time guidance and smart devices for minimally invasive interventions
  • connected products and services for chronic care.

Underpinning these solutions, and spanning the health continuum, our connected care and health informatics solutions enable us to:

  • connect patients and providers for more effective, coordinated, personalized care
  • manage population health, leveraging real-time patient data and clinical analytics.
Digital pathologyAzurionDallas Childrens Hospital

By addressing healthcare as a ‘connected whole’ in this way, we are able to unlock gains and efficiencies and drive innovations that help our customers to deliver on the Quadruple Aim of value-based healthcare: improved patient experience, better health outcomes, improved staff experience, and lower cost of care.

We are focusing on end-to-end pathways – at present primarily cardiology, oncology, respiratory care, and pregnancy and parenting – where we believe our integrated approach can add even greater value.

The road ahead

As we continue on our health technology journey, the drivers set out in the roadmap below are designed to deliver higher levels of customer value and quality, boost growth, and deliver winning solutions – all coming together to improve performance and results.

Health continuum

View the HTML version of our Annual Report 2017

Full HTML