2021annual results

Innovating healthcare, improving health

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Philips wearable biosensors

Message from the CEO

Based on the strength of our innovative portfolio and the trust our customers have in our ability to support them, I am confident about our future growth.
Frans van Houten
CEO Royal Philips
Dear Stakeholder,

Amidst the ongoing impact of COVID-19 on society, 2021 was an eventful and challenging year. Our continued strategic progress and strong growth in the first half of the year were overshadowed by the unprecedented scale of the global supply chain disruptions in the second half of the year, as well as the Philips Respironics voluntary field action to remediate the component quality issue in certain of its products.

The intensified global supply chain headwinds and postponement of customer equipment installations due to COVID-19 presented challenges to fully convert our opportunities to revenue in the second half of the year. These factors, combined with the sales consequences of the recall, resulted in full-year sales of EUR 17.2 billion, down 1% year-on-year.

As we work to overcome these headwinds and look to the future, I am very encouraged by the underlying performance of our businesses. Our Diagnosis & Treatment businesses and Personal Health businesses performed well in 2021, recording 8% and 9% 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. respectively. Following in the wake of 2020’s high COVID-19-related demand for hospital ventilation and monitoring & analytics solutions, our Connected Care businesses posted a 23% decline in comparable sales in 2021, which also reflects the effect of the Philips Respironics recall.

We have strengthened our portfolio through our R&D programs, partnerships, and acquisitions. The relevance of our innovative products and solutions and customer interest in partnering with Philips is underscored by the 4% growth in comparable order intake, resulting in an order book that is 18% higher year-on-year.

Nevertheless, I would like to emphasize that I very much regret the impact of the Philips Respironics recall on patients, care providers and shareholders. We identified – through our post-market surveillance processes – that the sound abatement foam used since 2008 in certain of our sleep and respiratory care products may degrade under certain circumstances. Subsequently, we issued a voluntary recall notification for affected devices to address potential health risks. We have ramped up production, service and repair capacity to ensure patients receive a repaired or replacement device as fast as possible.

As of January 2022, Philips Respironics has shipped a total of approximately 750,000 repair kits and replacement devices to customers and aims to complete the repair and replacement program in the fourth quarter of 2022. In close dialogue with regulators across the world, we are conducting a comprehensive test and research program to better characterize health risks. In parallel, we have captured and applied learnings from this recall across the entire company, as patient safety, quality and integrity are of the utmost importance to us.

Continued progress on strategic roadmap

In 2021, we saw sustained traction for our strategy to help transform the delivery of care across the health continuum, and our innovative portfolio resonates very strongly with customers.

Inspired by our purpose to improve people’s health and well-being, we innovate solutions that deliver meaningful impact. In the consumer domain, for instance, our new Sonicare 9900 Prestige electric toothbrush leverages AI to optimize the user’s brushing technique, ensuring full coverage of their teeth, and instills brushing habits that improve oral health.

For healthcare providers, our innovative solutions – smart combinations of systems, devices, software and services – help them deliver on the Quadruple Aim of better health outcomes, improved patient and staff experience, and lower cost of care:

  • Giving clinicians smart connected imaging tools like our new Spectral CT 7500 system, which deliver high-quality spectral images for every patient on every scan, helping them make precision diagnoses without the need for multiple re-scans. Or our new MR 5300 1.5T ‘helium-free for life’ system, which combines operational and clinical excellence with reduced environmental impact.
  • Enabling real-time, remote collaboration between technologists, radiologists and imaging operations teams across multiple sites with our vendor-neutral, multimodality Radiology Operations Command Center.
  • Helping surgeons in the interventional lab perform personalized, minimally invasive procedures with solutions like our Azurion next-generation image-guided therapy platform, which was further expanded with breakthrough applications in 2021.
  • Enabling healthcare professionals to orchestrate care delivery, also for patients recovering at home, with connected care solutions like our Patient Flow Capacity Suite, which helps hospitals manage the complete patient journey, and Acute Care Telehealth, which builds on our successful Tele-ICU solutions.

We signed 80 long-term strategic partnerships with hospitals and health systems around the world in 2021, underlining customers’ appreciation of our holistic approach to healthcare. Solutions-based sales and recurring revenues continue to generate a growing proportion of total sales, with the figure now standing at around 45%. In order to maintain the strong flow of health technology innovations going forward, we invested EUR 1.8 billion in R&D in 2021.

Major divestment completed, acquisitions to drive future growth

In September, we completed the sale of the Domestic Appliances business to Hillhouse Investment, concluding our line of major divestments. We believe this will allow us to focus on extending our leadership in health technology solutions.

To support future growth and the delivery of data-enabled care across care settings, we again invested significantly in our data science, informatics and cloud technology capabilities in 2021. The acquisitions of BioTelemetry, Capsule Technologies and Cardiologs (the latter completed in January 2022) strengthen our position in patient care management in the hospital and the home. In January 2022, we also closed the acquisition of Vesper Medical, further expanding our image-guided therapy devices portfolio with venous stents.

Delivering on our ESG commitments

We reached 1.67 billion people with our products and services in 2021, including 167 million in underserved communities – taking us a step closer to our goal of improving 2 billion lives per year by 2025, including 300 million in underserved communities.

We continued to deliver on the other key commitments set out in our Environmental, Social & Governance (ESG) framework. We are already carbon-neutral in our operations and are now engaging with suppliers and customers to reduce emissions across our entire value chain, as well as driving the transition to a circular economy.

We again received recognition for our sustainability efforts in 2021 – achieving a CDP ‘A List’ rating for the ninth consecutive year for our climate action, and securing second-highest place in the global Dow Jones Sustainability Indices (DJSI) list.

Looking ahead

We continue to invest in the future, further improving operational excellence and growing our core business, while driving our transformation into a digital, customer-first solutions company. I am very confident in our ability to overcome our current challenges. Against this background, and reflecting the importance we attach to dividend stability, we propose to maintain the dividend at EUR 0.85 per share.

Based on good customer demand and our growing order book, we expect to resume our growth and margin expansion trajectory in the course of 2022. In the short term, however, we continue to see significant volatility and headwinds related to COVID-19 and supply chain challenges, despite our ongoing mitigation efforts. Due to this, the Respironics field action and the strong growth in Q1 2021, we expect to start the year with a comparable sales decline, followed by a recovery and strong second half of the year. For the full year, we target 3-5% 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 40-90 basis-points improvement 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.

In closing

I would like to thank our customers, suppliers and partners for their continued support over the past 12 months. And a special word of thanks to our employees for their fantastic contribution through another year of often difficult working circumstances due to the pandemic.

I would also like to express my appreciation to our shareholders for the confidence they continue to show in Philips’ long-term future. This is a future founded on purpose and the robust, growing demand for health technology, which Philips will serve with a relentless focus on customer needs, its strong portfolio of innovations, and an unwavering commitment to continuous improvement.

Frans van Houten
Chief Executive Officer

Our strategic focus

Driven by purpose

At Philips, our purpose to improve people’s health and well-being through meaningful innovation is at the center of everything we do. This core principle has never been more important than it is in these challenging times. 

As a leading health technology company, we believe that – viewed through the lens of customer needs – innovation can improve people's health and healthcare outcomes, as well as making care more accessible, personal, connected and sustainable. 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.

Philips Lumify ultrasound

Guided by this purpose, it is our strategy to lead with innovative solutions that combine products, systems, software and services and leverage clinical and operational data, to help our customers deliver on the Quadruple Aim (better health outcomes, improved patient experience, improved staff experience, lower cost of care) and help people 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). 

Philips scanner refurbishment

Our view on healthcare

Besides the healthcare sector's 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 – this puts people’s health journeys front and center and enables integrated care pathways. Believing that healthcare should be safe, seamless, efficient and effective, we strive to ‘connect the dots’ for our customers and consumers, supporting the flow of real-time data needed to provide precision diagnoses, treatment and chronic care for patients. 

Philips health continuum

Going forward, we believe the digital transformation of healthcare and – accelerated by COVID-19 – the increasing adoption of virtual care or ‘telehealth’ will play a major 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.

Philips telehealthPhilips patient monitoring

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. 

Philips SonicarePhilips sleep and respiratory care

In addition to leveraging retail trade partnerships and new business models, we are focused on 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.

Philips clinical informaticsPhilips diagnostic imaging

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

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, while patients have a much better experience and can return home faster
Connected Care

Driving better care management by providing a wealth of actionable data about patients' condition and hospital operations, and seamlessly connecting patients and caregivers in any care setting from the hospital to the home

Personal Health

Delivering propositions that help people enjoy healthier lifestyles and enhance personal hygiene

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.

Philips strategic roadmap

Underpinned by these strategic imperatives, 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 to 6%. In 2022, Philips targets to deliver 3 to 5% 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. for the Group.
  • An average 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 to 80 basis points annually over the 2021-2025 period, reaching high-teens for the Group. In 2022, Philips targets to deliver a 40 to 90 basis-points improvement 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 for the Group. 
  • 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.
Indicative growth acceleration drivers
Adjusted EBITA improvement drivers

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 2021 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 & Latin America

Lankenau Heart Institute and University of California, San Francisco

USA

Philips signed a long-term strategic partnership specifically focused on integrated cardiovascular solutions with Lankenau Heart Institute, part of Main Line Health, and formed a unique partnership with the University of California, San Francisco (UCSF), to develop AI technologies that will enable personalization and make it easier for patients to select providers, access their health information and receive virtual care at home.

Baptist Health

USA

Philips signed a 10-year strategic partnership with Baptist Health to provide patient monitoring solutions and standardize care across the network, supporting their digital transformation goals.

UnitedHealth Group

Brazil

In Latin America, Philips signed a strategic agreement with UnitedHealth Group, comprising a comprehensive portfolio of Diagnostic Imaging, Image Guided Therapy and Customer Services solutions and a turnkey solution for the renovation of 12 sites in Brazil.

Asia

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Yili Chuanxin Oncology hospital

China

Philips provided the Yili Chuanxin Oncology hospital in Xinjiang, a newly established top-tier private hospital, with an Oncology solution to address the hospital’s clinical needs in screening, precision diagnosis, targeted treatment and rehabilitation of cancer patients. The solution includes IntelliSpace Digital Pathology and the Ingenia 3.0T MR, IQon Spectral CT, Incisive CT and CT Big Bore imaging systems, combined with IntelliSpace Portal for advanced visualization and analysis.

First Affiliated Hospital of Zhengzhou University

China

Philips provided The First Affiliated Hospital of Zhengzhou University – one of the biggest hospitals in the world, with more than 10,000 beds – with a range of advanced diagnostic imaging and image-guided therapy systems, including IQon Spectral CT and the Azurion image-guided therapy platform.

Gansu Provincial Maternity and Child Care Hospital

China

Philips signed a solutions contract with Gansu Provincial Maternity and Child Care Hospital to streamline and advance the delivery of critical care across multiple departments. The contract includes patient monitors, an ECG management system, and ICCA (IntelliSpace Critical Care and Anesthesia) informatics systems.

Europe, Middle East & Africa

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Vithas

Spain

Philips and Spanish healthcare group Vithas signed a 5-year strategic agreement, which will allow Vithas Group hospitals and medical centers to benefit from Philips’ latest innovations in diagnostic imaging technology, health informatics and equipment for minimally invasive interventional procedures.

University Hospital Brandenburg an der Havel

Germany

Philips signed a 10-year partnership agreement with the University Hospital Brandenburg an der Havel. The agreement includes a wide range of integrated solutions along the health continuum. Furthermore, Philips will act as the general contractor for an extension to the central operating rooms and cardiology department.

IJsselland Hospital

Netherlands

Philips signed a 12-year strategic partnership with IJsselland Hospital, focusing on innovation, digitalization and optimization of care delivery, which also includes the delivery of patient monitoring and imaging solutions, including CT and MRI systems.

Progress towards our goals

1.75billion
1.67
2.5
Lives improvedBased on full-year 2021 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

Read more about our purpose

207million
167
400
Lives improved in underserved healthcare communitiesBased on full-year 2021 data

As part of our goal to improve the lives of 2.5 billion people a year by 2030, we have committed to improving access to care in underserved communities for 400 million people a year.

We are expanding access to care by:

  • working within an ecosystem of strong collaborators
  • driving digital and technological innovation across the health continuum
  • developing new business models
  • partnering to develop effective financing solutions.

Lives improved trend line

Lives improved

(in millions)
 Q1 2020Q2 2020Q3 2020Q4 2020Q1 2021Q2 2021Q3 2021Q4 2021
Lives improved1,4721,4881,5121,5291,6361,6521,6611,670

Lives improved in underserved healthcare communities

(in millions)
 Q1 2020Q2 2020Q3 2020Q4 2020Q1 2021Q2 2021Q3 2021Q4 2021
Lives improved119122125127160164164167

The increase in lives improved was driven by steady growth in all segments and the inclusion of new products and solutions from our Image Guided Therapy-Devices, Enterprise Diagnostic Informatics and Electronic Medical Record & Care Management businesses, Philips Foundation and Philips’ Corporate Social Responsibility projects. These additions have been added retroactively as of Q1 2021.

2E226E4A-9D34-428E-9603-8F2147474F3A
71%70%100% sales from green products and solutions 1
71%
7C04B12B-8CA6-4A93-B8DE-DECFF9EDAB7D
15%15%25% sales from circular products and solutions
16%
B58BD847-4D65-4A26-B2B8-387BFF8C1715
100%100%100% operations powered by renewable electricity
100%
E2C0C3A3-A18F-4561-B6FB-CF881CE7508A
90%90%95% circular materials management 2
87%
124104F3-3131-41A9-B350-DCA9E31AE498
100%100%100% industrial sites sending zero waste to landfill
100%
15158A4B-4536-4366-A76C-8D8AB0A0B760
20%10%5% reduction in water consumption from 2019 level
1%
All data points refer to 2021
1 We will design 100% of our products and services in line with EcoDesign requirements by 20252 Recycling, reuse and circular materials management of the total used materials

Sustainable use of materials and energy

Reflecting our commitment to SDG 12 (Sustainable consumption and production) and SDG 13 (Climate action), we have set specific targets – to be achieved by 2025 – to reduce our environmental impact and help fight climate change. Here you can see how we’re progressing towards these goals.

Read more about our sustainability program

Making the world healthier and more sustainable

In 2021, we made further advances in the focal areas of 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.

Climate action

  • At COP 26, Philips announced an ambitious climate action to drive significant reduction of greenhouse gas emissions in our supply chain, aiming to have at least 50% of our suppliers (based on spend) committed to science-based targets for CO2 reduction by 2025.
  • Philips was recognized for its climate action leadership by global environmental non-profit CDP. Thanks to our actions to cut emissions, mitigate climate risks, and develop the low-carbon economy, Philips secured a place on CDP’s ‘A List’ for the ninth consecutive year. 
  • The Krammer windfarm, from which the Dutch wind consortium (Nouryon, DSM, Google and Philips) source renewable electricity, has generated 1 Terawatt since it came into operation, thereby avoiding 450,000 tons of CO2 – equivalent to the annual carbon sequestration of more than 13 million medium-sized oak trees.

Circular economy

  • Revenues from Circular Products and Solutions increased to 16% (15% in 2020).
  • Philips’ new MR 5300 system, introduced at RSNA 2021, has received 510(k) clearance from the US Food and Drug Administration (FDA). With this introduction, the company’s latest BlueSeal fully-sealed helium-free-in-operations MR scanner continues the advancement of a full helium-free operating portfolio of Philips MR solutions.

Access to care

  • Philips and Dutch development bank FMO announced that they have signed a wider partnership agreement aimed at improving access to quality primary care in Africa.
  • Some 100 public health facilities in Kenya are live on a remote equipment monitoring solution from our Connected Primary Care solutions venture, as part of a project of UNICEF and Philips Foundation to measure the impact of equipment availability and uptime.
  • Philips received a USD 15.4 million grant from the Bill & Melinda Gates Foundation to develop an artificial intelligence (AI)-based application suite to improve the quality and accessibility of obstetric care in low- and middle-income countries, especially in underserved communities.
  • Philips and Medical Credit Fund announced a partnership to improve access to quality healthcare in Africa. This partnership offers small and medium-sized private clinics in Africa access to financing for innovative medical technologies and services from Philips.
  • Philips is partnering with UNFPA in Brazil to distribute the Pregnancy+ app to expectant mothers in underserved areas. The goal is to fill the knowledge gaps of future moms and their partners and provide reliable resources that help each woman feel better informed, prepared and confident about her pregnancy.

Other highlights

  • Through our supplier sustainability engagement program, we improved the lives of 430,000 workers in the supply chain in 2021, reducing the risk of injury in the workplace, improving labor conditions, and lowering the environmental impacts made at our supply partners.
  • Philips was again recognized as one of the leading companies for sustainability performance in the global 2021 Dow Jones Sustainability Indices (DJSI) list, achieving a #2 ranking in the DJSI Health Care Equipment & Suppliers industry group.
  • Philips received a score of 90 out of 100 in the Environmental, Social and Governance (ESG) assessment by S&P Global Ratings, the highest score awarded to date.
  • Philips published its Human Rights Report 2021, providing an overview of our initiatives promoting respect for human rights, not only within Philips, but also across our value chain and the wider societies we serve.
  • Philips was ranked 13th in the 2021 RepTrak list of companies with the best reputation globally (up from 29th position in 2020). Philips earned the top spot in RepTrak's ranking for the Netherlands for the 14th consecutive year.

Philips' ESG performance at a glance

The dashboard below shows how Philips performed in 2021 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)
  • Taskforce on Climate-related Financial Disclosures (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 sensitivity19 tonnes waste sent to landfillAll 25/25 industrial sites 'Zero Waste to Landfill' at year-end
  • Water consumption and withdrawal in water-stressed areas703,104 m3 total water intake256,957 m3 in water-stressed areas
  • Circular revenues *16% of revenues
  • Closing the loop **Philips-specific metricClosed the loop for over 3,000 systems returned to us

Social

  • Lives Improved *1.67 billion, of which 167 million in underserved communities
  • Diversity & Inclusion28% gender diversity in senior leadership positions40% gender diversity in total workforce79% Employee Engagement Score *
  • Pay equalityEDGE-certified for Gender Equality in the NetherlandsUS Nationwide Pay Equity project scheduled for 2022
  • Wage level6,246 million EUR employee benefit expensesPhilips pays all employees at least a living wage
  • Risk for incidents of child, forced or compulsory laborAddressed in Philips GBP, Supplier Sustainability Declaration and Supplier Sustainability program
  • Health & Safety0.29 Total Recordable Case rate per 100 FTEs213 Total Recordable Cases
  • Training provided830,000 training hours in Philips University835,000 training completions
  • Absolute number and rate of employment78,189 employees18% turnover
  • Supplier development program *351 companies430,000 employees impacted
  • Volunteering *37 new projects in 2020 reaching 17.3 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-corruption71,000 employees completed General Business Principles training
  • Protected ethics advice and reporting mechanismsWhistleblower mechanism in place
  • Integrating risk and opportunity in business processesIncluded in Risk Management section
  • Economic contribution17,156 million EUR revenues773 million EUR dividend declared6.7 million EUR contribution to Philips Foundation104 million EUR government grants
  • Financial investment contribution2,699 million EUR total tangible assets802 million EUR capital expenditure
  • Total R&D expenses1.8 billion EUR invested in R&D (10.5% of revenues)
  • Total tax contribution4,090 million EUR

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:

Strategy

Our strategy defines our path to sustainable value creation for customers and shareholders.

Governance

Clear governance, roles and responsibilities empower people to collaborate and act fast.

Processes

Simplified standard processes, systems and practices enable lean and agile ways of working.

People

We value and develop people and teams, rewarding them for sustainable results.

Culture

We live the Philips culture, which sets standards on behaviors, such as ensuring patient safety, quality and integrity, and putting the customer first.

Performance

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 78,189, 120-plus nationalities, 40% female
  • Philips University 863,000 courses, 830,000 hours, 835,000 training completions
  • 31,923 employees in growth geographies
  • Focus on Inclusion & Diversity

Intellectual

  • Invested in R&D EUR 1.8 billion (Green Innovation EUR 197 million)
  • Employees in R&D 10,751 across the globe including growth geographies

Financial

  • Equity EUR 14.5 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 4.7 billion

Manufacturing

  • Employees in production 38,618
  • Industrial sites 25, cost of materials used EUR 4.1 billion
  • Total assets EUR 31 billion
  • Capital expenditure EUR 397 million

Natural

  • Energy used in manufacturing 1,263 terajoules
  • Water used 703,104 m3
  • 'Closing the loop' on all our professional medical equipment by 2025

Social

  • Philips Foundation
  • Stakeholder engagement
  • Volunteering policy
c-tile__intro-image
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 219,419
  • Safety 213 Total Recordable Cases

Intellectual

  • New patent filings 860
  • Royalties EUR 382.5 million
  • 182 design awards

Financial

Manufacturing

  • EUR 12.0 billion revenues from goods sold

Natural

  • 70.5% Green/EcoDesigned Revenues
  • 16% revenues from circular propositions
  • Net CO2 emissions from own operations down to zero kilotonnes
  • 73.5 tonnes (estimated) materials used to put products on the market
  • Waste 22,204 tonnes, of which 87% repurposed

Social

  • Brand value USD 12.1 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 6,246 million, all staff paid at least a Living Wage
  • Appointed 72% of our senior positions from internal sources
  • 28% 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 29 billion at year-end
  • Long-term credit rating A- (Fitch), Baa1 (Moody's), BBB+ (Standard & Poor's)
  • Dividend EUR 773 million

Manufacturing

  • 100% electricity from renewable sources

Natural

  • Environmental impact of Philips operations down to EUR 106 million
  • All 25/25 industrial sites 'Zero Waste to Landfill' at year-end 2021
  • First health technology company to have its CO2 reductions assessed and approved by the Science Based Targets initiative

Social

  • 1.67 billion Lives Improved, of which 167 million in underserved communities (including 2.2 million via Philips Foundation)
  • 430,000 employees impacted at suppliers participating in the 'Beyond Auditing' program
  • Total tax contribution EUR 4,090 million (taxes paid/withheld)
  • Income tax benefit EUR 103 million; the effective income tax rate is (20.0)%

Interactive charts and historical data

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

[maintitle]

in millions of EUR

2019

2020

2021

Net cash provided by operating activities

1,813
2,511
1,629

Net capital expenditures

(891)
(876)
(729)

Free cash flows

923
1,635
900

[maintitle]

in millions of EUR

2019

2020

2021

Sales

17,147
17,313
17,156

Income from operations

1,366
1,264
553

Adjusted EBITA

2,270
2,277
2,054

Income (loss) from continuing operations

990
999
612

Net income (loss)

1,173
1,195
3,323

[maintitle]

as a % of sales

2019

2020

2021

Income from operations

8.0%
7.3%
3.2%

Adjusted EBITA

13.2%
13.2%
12.0%

[maintitle]

in millions of EUR

2019

2020

2021

Total assets

27,016
27,713
30,961

Total provisions and liabilities

14,391
15,812
16,486

Shareholders’ equity

12,597
11,870
14,438

Market capitalization at year-end

38,775

39,627

29,000

[maintitle]

in EUR

2019

2020

2021

Adjusted income from continuing operations attributable to shareholders per common share - diluted

1.74
1.74
1.65

Income from continuing operations attributable to shareholders per common share - diluted

1.06
1.08
0.67

Dividend distributed per common share

0.85
0.85
0.85

Share price at year-end

44.40
43.78
32.77

Price/earnings ratio (basic EPS)

41.50
40.17
48.91

Total employees at year-end

 

2019

2020

2021

Philips Group

73,311

75,001

78,189

Engagement index

% positive score

2019

2020

2021

Philips Group

74

79

79

Female executives

in % of total

2019

2020

2021

Philips Group

22

24

25

Lost Workday Injuries

per 100 FTEs

2019

2020

2021

Diagnosis & Treatment0.330.270.28
Connected Care0.090.110.09
Personal Health0.140.220.16
Other0.090.060.12
Philips Group0.140.120.16

Total recordable cases

per 100 FTEs

2019

2020

2021

Diagnosis & Treatment0.610.450.53
Connected Care0.340.310.31
Personal Health0.180.300.24
Other0.240.160.21
Philips Group0.320.240.29

Fatalities

 

2019

2020

2021

Philips Group

0

1

0

Green Revenues (in millions of EUR)

in millions of EUR

2019

2020

2021

Diagnosis & Treatment

6,316

6,373

6,702

Connected Care

3,091

3,586

2,547

Personal Health

2,798

2,706

2,846

Philips Group

12,205

12,665

12,095

Green Revenues (as a % of total sales)

as a % of total sales

2019

2020

2021

Diagnosis & Treatment

74

78

78

Connected Care

66

64

55

Personal Health

80

85

83

Philips Group

71

73

71

Green Innovation

in millions of EUR

2019

2020

2021

Diagnosis & Treatment

110

122

96

Connected Care

21

51

32

Personal Health

77

80

65

Other

5

2

4

Philips Group

213

255

197

Operational Carbon Footprint

in kilotonnes CO2-equivalent

2019

2020

2021

Logistics

470

415

417

Business travel

152

70

72

Non-industrial operations

25

15

14

Manufacturing

21

18

16

Operational carbon footprint by Greenhouse Gas Protocol scopes

in kilotonnes CO2-equivalent201920202021
Scope 1323027
Scope 2 (market based)1433
Scope 2 (location based)196173177
Scope 3622485489
Total (scope 1, 2 (market based), and 3)668518519
Emissions compensated by carbon offset projects416518519
Net operational carbon emissions in kilotonnes25200

Operational energy efficiency

in terajoules per million EUR sales201920202021
Philips Group0.120.110.11

Total energy consumption in manufacturing

in terajoules

2019

2020

2021

Diagnosis & Treatment

547

580

631

Connected Care

281

229

161

Personal Health

485

412

471

Philips Group

1,313

1,221

1,263

Water withdrawal

in thousands of m3

2019

2020

2021

Diagnosis & Treatment

295

286

337

Connected Care

150

116

119

Personal Health

265

221

247

Philips Group

710

623

703

Zero waste to landfill

in tonnes

2019

2020

2021

Philips Group

1,285

480

19

Materials repurposed (Circular Materials Management) per total waste

in %

2019

2020

2021

Philips Group

82

90

87

Hazardous substances emissions

 in kilos

2019

2020

2021

Diagnosis & Treatment

104

92

181

Connected Care

46

20

1,239

Personal Health

336

455

1,242

Philips Group

486

567

2,662

VOC emissions

in tonnes

2019

2020

2021

Diagnosis & Treatment

46

44

42

Connected Care

6

3

3

Personal Health

54

32

33

Philips Group

106

79

78

ISO 14001 certification

as a % of all reporting organizations

2019

2020

2021

Philips Group

79

81

92

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2021
at a glance

Social impact

  • 1.67 billion lives improved
  • 167 million in underserved communities

Environmental sustainability

  • Circular revenues at 16% of sales
  • Carbon-neutral in our operations

Innovation

  • Innovations gaining market share
  • EUR 1.8 billion invested in R&D

Transformation

  • Approximately 45% of sales from solutions and recurring revenues
  • Domestic Appliances business sold, 
    divestments completed

Operations

  • Philips Respironics recall
  • Global supply chain headwinds

People & culture

  • Increased focus on patient safety
  • 79% Employee Engagement Score

Business development

  • 4% growth in comparable order intake
  • 80 long-term strategic partnerships

Financials

  • EUR 17.2 billion sales
  • 12% Adjusted EBITA* margin
  • EUR 3.3 billion net income
*Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.