2019 annual results

Amsterdam, February 25, 2020

Innovating with purpose

  • Sales rose to EUR 19.5 billion, a nominal increase of 8%, with 10% growth in the Diagnosis & Treatment businesses, 8% growth in the Connected Care businesses and 6% growth in the Personal Health businesses. On a comparable basis sales growth was 4.5%, with 5% growth in the Diagnosis & Treatment businesses, 5% growth in the Personal Health businesses, and 3% growth in the Connected Care businesses.
  • Net income amounted to EUR 1.2 billion, an increase of EUR 76 million compared to 2018, mainly due to improvements in operational performance, lower net financial expenses and lower charges related to discontinued operations, partly offset by higher income tax expense and charges of EUR 97 million related to impairment of goodwill. Net income is not allocated to segments as certain income and expense line items are recorded on a centralized basis.
  • Adjusted EBITA increased to EUR 2.6 billion, or 13.2% of sales, an increase of EUR 197 million, or 10 basis points as a % of sales, compared to 2018. The productivity programs delivered annual savings of approximately EUR 480 million, and included approximately EUR 166 million procurement savings, led by the Design for Excellence (DfX) program, and EUR 314 million savings from other productivity programs. While the Diagnosis & Treatment and Personal Health businesses delivered good profit expansion, the Connected Care business showed a decline of 200 basis points, primarily due to tariffs, an adverse currency impact, mix and higher material costs.
  • Net cash provided by operating activities amounted to EUR 2.0 billion, an increase of EUR 251 million, mainly due to higher earnings that were partly offset by higher working capital outflows and higher tax paid, while 2018 included an outflow of EUR 130 million related to pension liability de-risking. Free cash flow amounted to EUR 1.1 billion compared to EUR 984 million in 2018.
  • In the second quarter of 2019, Philips completed its EUR 1.5 billion share buyback program that was announced on June 28, 2017. All of the shares acquired under the program were cancelled.
  • On January 29, 2019, Philips announced a new EUR 1.5 billion share buyback program for capital reduction purposes. As of the end of 2019, Philips completed 41.5% of this program.
  • During 2019 Philips sold all of its remaining shares (16.5%) in Signify (formerly Philips Lighting). For further information, refer to Sell-down Signify shares (former Philips Lighting).
  • Philips has signed a new partnership agreement with the Republic of the Congo’s Ministry of Health & Population and the United Nations Population Fund to reduce maternal and newborn mortality. The three partners will work together to develop a large-scale Emergency Obstetric and Newborn Care (EmONC) program that will reach more than 500,000 women and 70,000 newborns, improving access to high-quality and affordable maternal, neonatal and child healthcare.
  • Philips has teamed up with non-profit organization PURE (Point-of-care Ultrasound in Resource-limited Environments), on a pioneering tele-ultrasound program linking specialists around the globe with physicians in Rwanda.
  • Philips entered into a partnership with MedShare, a global humanitarian aid organization based in Atlanta, US, to deliver state-of-the-art maternal and neonatal medical equipment to medically underserved communities around the world.
  • Revenues from Circular Products and Solutions increased to 13% (12% in 2018).
  • At the CleanMed conference in Nashville, USA, Philips supported US hospitals, health systems and suppliers in co-creating circular economy initiatives. CleanMed is the world’s largest conference on sustainability in healthcare.
  • With the opening of Windpark Krammer, Philips’ Netherlands-based operations are now 100%-powered by renewable electricity. Combined with the 100% target already achieved in the US, Philips is now firmly on course to achieve global carbon neutrality next year, delivering on its commitment to the UN Sustainable Development Goal on climate change.
  • For the seventh 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
  • Revenues from Green Products and Solutions advanced to 67% of total revenues (64% in 2018).
  • Philips has once again been recognized as one of the top companies for sustainability performance in the global 2019 Dow Jones Sustainability Indices (DJSI) list. Philips scored 82 out of 100 points in the DJSI Health Care Equipment & Services industry group, further improving on its 2018 score to achieve the #2 ranking in 2019.Read more
  • Philips issued its first Green Innovation Bond under the Philips Green & Sustainability Innovation Bond Framework developed together with Rabobank. The proceeds of this bond will be used as an alternative means to finance our expenditures on green innovation, the transition to the circular economy, and becoming carbon-neutral.Read more

Inspira Health

New Jersey, USA

We have entered into a strategic 5-year partnership agreement with Inspira Health to standardize patient monitoring and drive innovation in diagnostic imaging solutions in order to enhance patient care and improve clinical workflow performance. The contract also includes training and services that will maximize Inspira’s operational efficiency.

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Regional Medical Center

South Carolina, USA

In December, we announced a strategic 5-year partnership agreement with the Regional Medical Center (RMC) to deliver innovative diagnostic imaging solutions for residents of four rural counties. The partnership will also support the expansion of the region’s only stand-alone community hospital, help RMC to standardize its imaging platforms and better integrate workflows and information.

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Walgreens

Illinois, USA

Philips and Walgreens have engaged in a joint effort to help consumers identify the root causes of their sleep issues by integrating the SmartSleep Analyzer tool into the Walgreens Find Care™ platform, and connecting them with Philips sleep solutions available for sale on Walgreens.com.

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Klinikum Stuttgart

Stuttgart, Germany

We have signed a comprehensive 10-year innovation partnership agreement with Klinikum Stuttgart. The agreement covers the replacement and procurement of state-of-the-art medical technology, including diagnostic imaging and intelligent informatics solutions, at Klinikum Stuttgart hospitals, together with joint development of new workflows and connected care solutions.

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Rutherford Diagnostics

Guildford, UK

In May, we entered into a 10-year strategic partnership agreement with Rutherford Diagnostics. This collaboration will utilize Philips’ innovative radiology technology and Rutherford Diagnostics’ healthcare expertise to deliver and operate advanced personalized diagnostic services through a network of community diagnostic centers across England.

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Centre Hospitalier Régional Universitaire de Nancy

Nancy, France

In July, we announced a 10-year enterprise informatics agreement with Centre Hospitalier Régional Universitaire de Nancy to implement Philips’ IntelliSpace Enterprise Imaging Solution, including Illumeo with adaptive intelligence. The agreement will enable CHRU de Nancy to streamline complex medical image data management across its departments in order to increase efficiency and improve patient care.

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Xi’an International Medical Group

Xi’an, China

Philips signed an agreement with the Xi’an International Medical Group to deliver solutions to address clinical and research needs in cardiology, radiation oncology and critical care. With the Chinese health technology market dominated by transactional vendor relationships, this long-term strategic partnership demonstrates the potential to shift from a transactional market dynamic also in China, and our willingness to team up to create more value in healthcare.

Xiamen Cardiovascular Hospital

Xiamen, China

In July 2019, Philips completed the design direction for Xiamen Cardiovascular Hospital, and the design concept for the hospital's main lobby, emergency department, screening areas, cath labs, ICU, CCU and general ward. The result – achieved through an iterative co-creation process – is an exceptional patient experience and an efficient operational workflow.

Hong Duc General Hospital

Ho Chi Minh City, Vietnam

In April, we announced a seven-year partnership agreement with Hong Duc General Hospital covering a comprehensive turnkey solution for high-quality general healthcare services. Under this agreement, Philips will provide the newly built Hong Duc General Hospital II with the latest medical imaging, patient monitoring and healthcare IT solutions, as well as design, consulting and financing services.

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