2020 annual results

Amsterdam, February 23, 2021

Innovating to address global health challenges

  • Sales amounted to EUR 19.5 billion, in line with 2019 on a nominal basis. On a comparable basis, overall sales growth was 3%, with 22% growth in the Connected Care businesses, a 2% decline in the Diagnosis & Treatment businesses, and a 4% decline in the Personal Health businesses. 
  • Net income amounted to EUR 1.2 billion, an increase of EUR 22 million compared to 2019, mainly due to lower net financial expenses and lower income tax expenses, partly offset by charges of EUR 144 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 amounted to EUR 2.6 billion, or 13.2% of sales, in line with 2019. The productivity programs delivered annual savings of approximately EUR 447 million and included approximately EUR 222 million procurement savings, led by the Design for Excellence (DfX) program, and approximately EUR 225 million savings from other productivity programs. While the Connected Care businesses delivered improved profit expansion, both the Diagnosis & Treatment businesses and Personal Health businesses showed a decline in 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. This was primarily due to lower volumes and resulting lower factory fixed cost coverage, an adverse mix impact due to lower sales in Ultrasound and Image-Guided Therapy in the Diagnosis & Treatment businesses, and the decline in sales, partly offset by cost savings, in the Personal Health businesses.
  • Operating cash flow amounted to EUR 2.8 billion, an increase of EUR 746 million, mainly due to working capital improvements, in particular better management of outstanding receivables. The 2019 figure was mainly attributable to higher earnings, partly offset by higher working capital outflows and higher tax paid. Free cash flow amounted to EUR 1.9 billion, compared to EUR 1.1 billion in 2019.
  • In 2020, Philips completed three acquisitions, with Intact Vascular, Inc. (Intact Vascular) being the most notable.
  • On January 29, 2019, Philips announced a new EUR 1.5 billion share buyback program for capital reduction purposes. As of the end of 2020, Philips had completed 50.3% of this program. Philips has executed the second half of the program through individual forward transactions with settlement dates extending into the second half of 2021.
  • In January 2020, Philips announced that it would review options for future ownership of its Domestic Appliances business, part of the Personal Health segment. 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. Separation costs of EUR 42 million were incurred in 2020.
  • 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.
  • 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.
  • 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 
  • 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

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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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