Our Q4 2019 performance at a glance

  • Sales amounted to EUR 6 billion, with 3% comparable sales growth
  • Comparable order intake increased 3%
  • Income from continuing operations was EUR 550 million, compared to EUR 723 million in Q4 2018
  • Adjusted EBITA margin improved by 50 basis points to 17.9% of sales, compared to 17.4% of sales in Q4 2018
  • Income from operations amounted to EUR 730 million, compared to EUR 769 million in Q4 2018
  • EPS from continuing operations (diluted) amounted to EUR 0.61; Adjusted EPS from continuing operations (diluted) increased 9% compared to Q4 2018 to EUR 0.83
  • Operating cash flow amounted to EUR 1,271 million, compared to EUR 1,293 million in Q4 2018; free cash flow was EUR 959 million, compared to EUR 1,019 million in Q4 2018

Full-year highlights

  • Sales increased to EUR 19.5 billion, with 4% comparable sales growth
  • Comparable order intake increased 3%
  • Income from continuing operations was EUR 1,192 million, compared to EUR 1,310 million in 2018
  • Adjusted EBITA margin increased 10 basis points to 13.2% of sales, compared to 13.1% of sales in 2018
  • Income from operations amounted to EUR 1,644 million, compared to EUR 1,719 million in 2018
  • EPS from continuing operations (diluted) amounted to EUR 1.30; Adjusted EPS from continuing operations (diluted) increased 15% compared to 2018 to EUR 2.02
  • Operating cash flow totaled EUR 2,032 million, compared to EUR 1,780 million in 2018; free cash flow increased to EUR 1,053 million, compared to EUR 984 million in 2018
  • Proposed dividend of EUR 0.85 per share

Company update

  • Philips to review ownership options for the Domestic Appliances business
  • Roy Jakobs appointed as the new Chief Business Leader of the Connected Care businesses, succeeding Carla Kriwet, who will leave the company

Key data

in millions of EUR unless otherwise stated

Q4 2018

Q4 2019

Sales

5,586

5,958

Nominal sales growth

5%

7%

Comparable sales growth1

5%

3%

Comparable order intake1

10%

3%

Income from operations

769

730

as a % of sales

13.8%

12.3%

Financial expenses, net

(58)

(57)

Investments in associates, net of income taxes

-

(1)

Income tax expense

12

(122)

Income from continuing operations

723

550

Discontinued operations, net of income taxes

(44)

6

Net income

678

556

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

0.77

0.61

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

0.76

0.83

Net income attributable to shareholders2 per common share (in EUR) - diluted

0.72

0.62

EBITA1

861

868

as a % of sales

15.4%

14.6%

Adjusted EBITA1

971

1,066

as a % of sales

17.4%

17.9%

Adjusted EBITDA1

1,170

1,335

as a % of sales

20.9%

22.4%

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Message from the CEO

“I am encouraged that the three business segments together delivered 4% comparable sales growth and an Adjusted EBITA margin improvement of 120 basis points in the fourth quarter, despite a more challenging environment. This performance was partly offset by lower IP royalties compared to Q4 2018, resulting in 3% comparable sales growth and an Adjusted EBITA margin improvement of 50 basis points for the Group. Comparable order intake grew a further 3%, on the back of strong 10% growth in Q4 2018.

For the full year, we are pleased to have grown the company to EUR 19.5 billion sales with 4.5% comparable sales growth, achieving a free cash flow of more than EUR 1 billion, and increasing adjusted earnings per share from continuing operations by 15%. Our profitability improvement of 10 basis points for the year fell short of our plan, partly due to headwinds.

Looking ahead at 2020 we continue to see geopolitical and economic risks. We aim for 4-6% comparable sales growth and an Adjusted EBITA margin improvement of around 100 basis points, with a performance momentum that is expected to improve in the course of the year.”

Frans van HoutenChief Executive Officer

Highlights of Q4

Lives improved

Improving people’s lives

In 2019, Philips’ products and solutions improved the lives of 1.64 billion people, compared to 1.54 billion in 2018; this includes 194 million people in underserved communities, compared to 175 million in 2018. Additionally, for the seventh consecutive year Philips was ranked on CDP's Climate Change A-list in recognition of its actions to reduce emissions, mitigate climate risks and develop the low-carbon economy. Philips is the first health technology company to have committed to become carbon-neutral in its operations by 2020.

Read more

Long-term strategic partnerships

New partnerships in the US

Philips entered into several new long-term strategic partnerships, including a 5-year partnership with the Regional Medical Center in South Carolina to provide diagnostic imaging and image-guided therapy solutions to innovate patient care. Philips also announced a 5-year agreement with US-based Inspira Health to standardize patient monitoring and drive innovation in diagnostic imaging and image-guided therapies in order to enhance patient care and improve clinical workflow performance.

Read more (Regional Medical Center)Read more (Inspira Health)

Contract wins in China

Contract wins in China

Driven by Philips’ innovative portfolio of diagnostic imaging, image-guided therapy and patient monitoring solutions, the company continues to win large contracts in China. For example, 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.

integrated solutions

Setting the standard in image-guided therapy

Philips continues to set the standard in integrated solutions for image-guided therapy with the expansion of its Azurion platform with FlexArm and the seamless integration of its smart catheters in the platform. The successful launch of Azurion in China and expansion of its smart catheter offering in Europe and Asia contributed to double-digit comparable sales and order intake growth for the Image-Guided Therapy business in 2019.

Read more

Impactful telehealth solutions

Impactful telehealth solutions

Demonstrating the success of Philips’ telehealth solutions for critical care, US-based Health First achieved significant results by using Philips’ acute telehealth platform. Powered by Philips’ eCareManager, Health First’s VitalWatch eICU achieved a 23% reduction in overall mortality, a 49% reduction in ICU length of stay, and a 35% reduction in length of stay across its four hospitals.

Read more

Patient care

Expanding our General Care solutions portfolio

Philips expanded its General Care solutions portfolio with the launch of the EarlyVue VS30 in the US. This new vital signs monitor uses automated Early Warning Scoring (EWS) to collect critical vital signs and calculate risk-based alerts that allow clinicians to identify subtle signs of patient deterioration and facilitate communication between caregivers for timely intervention and patient care.

Read more

Philips Shaver Series 9000 Prestige

Continued success for innovative shavers

The global roll-out of Philips’ premium Shaver S9000 Prestige with BeardAdapt Sensor, which adapts the shaver automatically to the user’s hair, and mid-range Shaver S7000 with a personalized solution for sensitive skin, continues to result in positive user reviews and supported strong performance of the Male Grooming business in the quarter.

Teledentistry

Partnering to improve oral care in the US

Building on the success of Philips’ leading oral care solutions, the company rolled out the BrushSmart program in collaboration with Delta Dental of California, the largest provider of dental benefits in the US. The subscription-based program includes a discounted Sonicare toothbrush, coaching and teledentistry, and connects brushing behaviors at home with professional dental care to better understand, motivate and drive improvements in oral health.

Read more

Making the world healthier and more sustainable

[sectortitle]

Lives Improved (all)

[unittitle]

[datatitle]

region

market

2018_q3

2018_q4

2019_q1

2019_q2

2019_q3

2019_q4

population_millions

gdp_billions

world

emea

africa

30.2

30.1

31.7

31.9

31.8

33.4

1,290

2,407

world

asia

asean

129.8

133.8

141.5

152.3

155.2

158.2

981

6,700

world

emea

benelux

26.8

26.6

27.1

27.2

27.3

27.4

29

1,489

world

emea

central-east_europe

77.6

78.3

80.3

80.1

79.9

80.3

166

1,909

world

emea

dach

79.4

78.5

79.8

80.1

80.3

80.6

101

5,033

world

emea

france

45.1

44.0

44.4

44.6

44.7

44.5

66

2,739

world

asia

greater_china

392.8

398.4

419.4

422.1

423.2

426.2

1,432

15,141

world

emea

iberia

28.6

28.0

29.0

29.7

29.7

29.9

57

1,639

world

asia

indian_subcontinent

73.7

73.9

76.1

76.9

78.8

79.4

1,570

3,372

world

emea

italy_israel_greece

32.3

31.8

33.4

33.9

34.2

34.7

82

2,631

world

asia

japan

39.7

40.0

40.6

40.9

41.3

41.8

126

5,155

world

latam

latin_america

101.1

101.7

104.7

104.6

103.8

99.3

645

5,430

world

emea

middle-east_turkey

58.6

59.1

64.0

65.8

66.6

68.5

372

3,246

world

emea

nordics

17.6

17.2

17.5

17.8

18.0

18.4

28

1,594

world

north_america

north_america_bmc

326.9

326.5

326.1

340.0

341.2

343.6

367

23,170

world

asia

russia_central-asia

39.7

39.0

42.6

42.6

42.7

43.3

251

2,085

world

emea

uk_ireland

35.5

34.4

34.4

34.5

34.9

34.7

72

3,143

[sectortitle] 

Lives Improved underserved

[unittitle]

[datatitle]

region

market

2018_q3

2018_q4

2019_q1

2019_q2

2019_q3

2019_q4

population_millions

gdp_billions

world

emea

africa

21.3

21.3

21.1

21.1

21.2

22.9

1,277

2,308

world

asia

asean

27.0

28.6

30.7

32.4

33.4

34.3

694

1,925

world

emea

benelux

-

-

-

-

-

-

-

-

world

emea

central-east_europe

28.3

28.5

31.8

31.6

31.4

31.6

89

801

world

emea

dach

-

-

-

-

-

-

-

-

world

emea

france

-

-

-

-

-

-

-

-

world

asia

greater_china

-

-

-

-

-

-

-

-

world

emea

iberia

-

-

-

-

-

-

-

-

world

asia

indian_subcontinent

65.9

65.8

68.8

69.1

70.2

70.6

1,548

3,286

world

emea

italy_israel_greece

-

-

-

-

-

-

-

-

world

asia

japan

-

-

-

-

-

-

-

-

world

latam

latin_america

2.5

2.5

2.7

2.9

2.8

3.0

113

488

world

emea

middle-east_turkey

0.9

0.9

0.7

0.7

0.8

0.8

127

273

world

emea

nordics

-

-

-

-

-

-

-

-

world

north_america

north_america_bmc

-

-

-

-

-

-

-

-

world

asia

russia_central-asia

27.8

27.0

31.2

30.9

30.6

31.0

250

2,085

world

emea

uk_ireland

-

-

-

-

-

-

-

-

Philips Group

Sustainability Worldmap Data

value_trc

value_co2

value_waste

value_wasterecycled

value_water

value_emissions

value_emissionshaz

philips_world

0.31

4924

7541

0.82

225270

63

246

philips_emea

0.26

2250

3705

0.84

44514

12

140

philips_asia

0.06

1389

2129

0.78

121625

32

97

philips_north_america

0.74

1091

1379

0.82

40776

8

8

philips_latam

0.19

194

328

0.83

18355

11

1

philips_africa

0.00

philips_dach

0.67

813

718

0.89

12711

3

18

philips_benelux

0.12

1187

1753

0.77

23597

7

50

philips_uk_ireland

0.20

46

275

0.98

1928

2

44

philips_iberia

0.51

philips_france

0.11

philips_nordics

0.60

philips_italy_israel_greece

0.42

104

304

0.69

3468

0

0

philips_middle-east_turkey

0.00

philips_central-east_europe

0.12

100

655

0.96

2810

0

28

philips_russia_central-asia

0.00

philips_greater_china

0.06

660

1517

0.72

81988

9

76

philips_japan

0.30

philips_indian_subcontinent

0.01

40

48

0.99

1909

2

17

philips_asean

0.04

689

564

0.92

37728

21

4

philips_north_america_bmc

0.74

1091

1379

0.82

40776

8

8

philips_latin_america

0.19

194

328

0.83

18355

11

1

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 hrough 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 2030.

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