Q4 2022results

 

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Philips Q4 2022 results

Message from the CEO

“2022 has been a very difficult year for Philips and our stakeholders, and we are taking firm actions to improve our execution and step up performance with urgency. When I took over as CEO in October 2022, I said that our priorities are first to further strengthen our patient safety and quality management and address the Philips Respironics recall; second, to improve our supply chain reliability to convert our order book to sales and improve performance; and third, to simplify how we work to increase agility and productivity. This is a step-by-step improvement journey supported by our leading market positions, extended customer base, meaningful innovations, ecosystem partnerships, strong brand, and talented employees.

As we are working through the operational challenges, we progressed on our execution priorities in the fourth quarter. We provided an important and encouraging update on the complete set of test results for the first-generation DreamStation sleep therapy devices and have completed around 90% of the production for the remediation. We were able to secure more components to convert our order book into sales, although the supply chain situation remains challenging. Our order book remains strong, despite the comparable order intake decline in the quarter. The previously announced workforce reduction by 4,000 roles globally and other actions are being implemented as planned.

Today, we will present Philips’ plan to create value with sustainable impact, which is based on focused organic growth to deliver patient- and people-driven innovation at scale with improved execution as key value driver, prioritizing patient safety and quality, supply chain reliability and a simplified operating model. We are confident that these measures will enable us to deliver on our purpose to improve people’s health and well-being through meaningful innovation and create value for all our stakeholders.”



Roy Jakobs
Chief Executive Officer

Business highlights

Philips’ ongoing focus on innovation and partnerships resulted in the following key developments in the quarter.

Strategic partnerships

New long-term strategic partnerships

Demonstrating the trust hospital leaders have in Philips’ strategy and solutions to help them improve health outcomes and productivity, and deliver care that is more convenient and sustainable, Philips signed around 100 new long-term strategic partnerships with hospitals and health systems across the world in 2022.

Personal health successes in China

Philips ranked as the number 1 brand in the personal health category on E-commerce platforms JD and Ali during the ‘Double 11’ shopping festival in China. Philips was the highest-ranked male grooming and oral healthcare brand on the key online shopping channels.
ESG

Environmental and social highlights

In 2022, Philips’ products and solutions improved the lives of 1.8 billion people, including 200 million people in underserved communities. In addition, Philips was again recognized with the prestigious ‘A’ score for its climate action leadership by global environmental non-profit CDP (Carbon Disclosure Project).
Ultrasound

Launch of new ultrasound system

Philips launched the Ultrasound Compact 5000, which is designed for portability and versatility with premium image quality and performance, to facilitate first-time-right ultrasound exams for more patients.
Find out more
Peripheral intravascular ultrasound (IVUS)

Research underscores IVUS patient benefits

In 2022, Philips’ Image-Guided Therapy business reached sales of over EUR 3 billion and further expanded its market leadership position leveraging the unique strengths of its successful interventional imaging systems, such as Philips Azurion, and rich portfolio of diagnostic and therapeutic devices, such as its IVUS (intravascular ultrasound) catheters. To further drive the use of these systems and devices based on clinical evidence, more than 110 clinical studies are ongoing, including the research studies conducted by the Smith Center for Outcomes Research at Beth Israel Deaconess Medical Center with recent results that further underpinned the outcome benefits of Philips’ IVUS devices.
RSNA

AI-powered diagnostic systems and workflow solutions

At RSNA 2022, one of the largest radiology meetings globally, Philips featured its latest AI-powered diagnostic systems and multi-vendor workflow solutions that help reduce clinical complexity and enhance operational efficiency. This included the MR 5300 with its unique BlueSeal magnet for helium-free operations and sustainable imaging with premium image quality and lower site costs. Philips also featured its vendor-neutral, multi-modality Radiology Operations Command Center, which is a multi-site telepresence solution that provides advanced tele-acquisition capabilities and seamlessly connects imaging experts at a command center with technologists at scanning locations across an organization.
Find out more

Making the world healthier and more sustainable

In Q4 2022, 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.

  • Our products and solutions improved the lives of 1.81 billion people worldwide in Q4 2022, an increase of 135 million lives year-on-year. Reflecting our efforts to expand access to care, this figure includes 199 million lives improved in underserved communities, compared to 167 million in Q4 2021. Find out how Philips measures lives improved.
  • Circular revenues amounted to 17.2% of sales, up from 15.3% in Q4 2021.
  • For the 10th year in a row, Philips was awarded the prestigious “A” score by global environmental non-profit CDP for leadership in corporate transparency and performance on climate change. Philips also received the “A” score for water security.
  • Philips became the first health technology company to have its entire value-chain CO2 emissions reduction targets approved by the Science Based Targets initiative (SBTi).
  • Philips published its Human Rights Report 2022 providing an overview of initiatives within Philips as well as in the value chain to respect every individual’s human rights.
  • At the COP26 UN Climate Change Conference in Glasgow in 2021, 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. By the end of Q4 2022, 41% of our suppliers (based on spend) had committed to such targets.

Progress towards our goals

1.65billion
1.81
2.5
Lives improvedBased on Q4 2022 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 and strategy

190 million
199
400
Lives improved in underserved healthcare communitiesBased on Q4 2022 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 healthcare 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)
 Q4 2021Q1 2022Q2 2022Q3 2022Q4 2022
 1,670
1,746
1,755
1,794
1,813

Lives improved in underserved healthcare communities

(in millions)
 Q4 2021Q1 2022Q2 2022Q3 2022Q4 2022
 167
184
185
193
199
2E226E4A-9D34-428E-9603-8F2147474F3A
65%70%100% sales from green products and solutions 1
71%
7C04B12B-8CA6-4A93-B8DE-DECFF9EDAB7D
13%15%25% sales from circular products and solutions
17%
B58BD847-4D65-4A26-B2B8-387BFF8C1715
95%100%75% operations powered by renewable energy
77%
E2C0C3A3-A18F-4561-B6FB-CF881CE7508A
85%90%95% circular materials management 2
92%
124104F3-3131-41A9-B350-DCA9E31AE498
58%100%100% industrial sites sending zero waste to landfill
100%
15158A4B-4536-4366-A76C-8D8AB0A0B760
9%10%5% reduction in water consumption from 2019 level
6%
All data points refer to Q4 2022 continuing operations
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 our goals.

Read more about our environmental sustainability drive

Q4 2022 results

Amsterdam, January 30, 2023

Results
Other
Respironics field action
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Key data

Sales

Philips Group

5,422million EUR
4,944million EUR in Q4 2021
10%Nominal growth
3%Comparable growth

Philips reporting segments

Diagnosis & Treatment

2,808million EUR
2,508million EUR in Q4 2021
12%Nominal growth
5%Comparable growth

Connected Care

1,368million EUR
1,199million EUR in Q4 2021
14%Nominal growth
5%Comparable growth

Personal Health

1,056million EUR
1,051million EUR in Q4 2021
0%Nominal growth
-4%Comparable growth

Other

190million EUR
186million EUR in Q4 2021

Sales per geographic cluster

Philips Group

5,422million EUR
4,944million EUR in Q4 2021
10%Nominal growth
3%Comparable growth

Sales by geographic area

Western Europe

1,144million EUR
1,111million EUR in Q4 2021
3%Nominal growth
4%Comparable growth

North America

2,283million EUR
1,903million EUR in Q4 2021
20%Nominal growth
5%Comparable growth

Other mature geographies

471million EUR
449million EUR in Q4 2021
5%Nominal growth
10%Comparable growth

Growth geographies

1,524million EUR
1,481million EUR in Q4 2021
3%Nominal growth
-2%Comparable growth

Green revenues

Philips Group

3,862million EUR
3,454million EUR in Q4 2021
12%Nominal growth

Philips reporting segments

Diagnosis & Treatment

2,197million EUR
1,970million EUR in Q4 2021
12%Nominal growth

Connected Care

723million EUR
632million EUR in Q4 2021
14%Nominal growth

Personal Health

943million EUR
850million EUR in Q4 2021
11%Nominal growth

Research and development expenses

Philips Group

504million EUR
475million EUR in Q4 2021

Philips reporting segments

Diagnosis & Treatment

249million EUR
228million EUR in Q4 2021

Connected Care

144million EUR
143million EUR in Q4 2021

Personal Health

51million EUR
49million EUR in Q4 2021

Other

60million EUR
55million EUR in Q4 2021

Income from operations and Adjusted EBITA (Philips Group)

Income from operations

171million EUR
162million EUR in Q4 2021
3.2%as a percentage of sales

Adjusted EBITA

651million EUR
647million EUR in Q4 2021
12.0%as a percentage of sales

Other key data

Income from continuing operations

-113million EUR
139million EUR in Q4 2021

Net income

-105million EUR
151million EUR in Q4 2021

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

-0.13EUR
0.16EUR in Q4 2021

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

0.41EUR
0.57EUR in Q4 2021

Lives improved (Philips Group)

Total

1.81billion

Net operational carbon footprint  (Philips Group)

0
kilotonnes CO2-equivalent
0kilotonnes CO2-equivalent in 2020
Results have been restated to reflect the treatment of the Domestic Appliances business as a discontinued operation