Koninklijke Philips N.v. · EURONEXT:PHIA

Koninklijke Philips — Koninklijke Philips N.V. NY Registry Shares — Q2 2023 Earnings Presentation

29 slides from Koninklijke Philips's earnings presentation, Jul 24, 2023

  1. Slide 1: Second quarter 2023 results

    Second quarter 2023 results July 24, 2023

  2. Slide 2: Important information

    Important information Forward-looking statements and other important information This document and the related oral presentation, including responses to questions following the presentation, contain certain forward-looking statements with respect to the financial condition, results of operations and

  3. Slide 3: Table of content

    Table of content Second quarter highlights and financial performance 4 Delivering value with sustainable impact 17 Financial appendix 24 3 © Koninklijke Philips N.V.

  4. Slide 4: Key takeaways

    Key takeaways • Delivered improved operational performance, with better sales, profitability and cash flow • Making progress on our three priorities: ‒ Enhance patient safety & quality ‒ Strengthen supply chain reliability ‒ Establish a simplified, agile operating model • Resolving the Respironics r

  5. Slide 5: Improved operational performance driven by sales growth and focus on execution

    Improved operational performance driven by sales growth and focus on execution, order book supporting growth for next quarters Financial performance Highlights in millions of EUR unless otherwise stated Q2 2022 Q2 2023 • Strong CSG with contribution from all business segments and geographies Sales 4

  6. Slide 6: Enterprise Monitoring as a Service agreement with University of California Irvine Health

    Enterprise Monitoring as a Service agreement with University of California Irvine Health Provides a predictable, interoperable, scalable monitoring and clinical insights capability • 10 years collaboration that combines Enterprise Monitoring as a Services model and the Clinical Integration and Insig

  7. Slide 7: Highlights by business segment in Q2 2023

    Highlights by business segment in Q2 2023 Diagnosis and Treatment +12% CSG Connected Care +6% CSG Personal Health +3% CSG • Sales growth across all businesses and regions • Sales growth driven by double-digit in • Returned to sales growth Monitoring • OIT declined 8% following high comps in last • S

  8. Slide 8: Diagnosis & Treatment

    Diagnosis & Treatment Financial performance in millions of EUR unless otherwise stated Q2 2022 Q2 2023 Sales 1,940 2,112 Comparable Sales Growth (5)% 12% Adj. EBITA margin 6.8% 10.6% Adj. EBITDA margin 9.4% 13.3% Income from operations 115 163 Q2 2023 highlights • Double-digit CSG in Ultrasound and

  9. Slide 9: Connected Care

    Connected Care Financial performance in millions of EUR unless otherwise stated Q2 2022 Q2 2023 Sales 1,273 1,327 Comparable Sales Growth (11)% 6% Adj. EBITA margin 1.8% 7.5% Adj. EBITDA margin 7.7% 12.1% Income from operations (144) (39) Q2 2023 highlights • Double-digit CSG in Monitoring, partly o

  10. Slide 10: Personal Health

    Personal Health Financial performance in millions of EUR unless otherwise stated Q2 2022 Q2 2023 Sales 831 836 Comparable Sales Growth (5)% 3% Adj. EBITA margin 12.4% 13.4% Adj. EBITDA margin 15.6% 16.1% Income from operations 98 107 Q2 2023 highlights • CSG driven by Mid-single-digit growth in Pers

  11. Slide 11: Adj. EBITA margin improvement driven by increased sales, royalty income and productivity

    Adj. EBITA margin improvement driven by increased sales, royalty income and productivity measures, partly offset by cost inflation Group Adj. EBITA margin1 0.3% 5.8% 1.5% (2.6%) 10.1% 5.2% Adj. EBITA Volume Cost headwinds Productivity and pricing Other Adj. EBITA Q2 2022 Q2 2023 11 1. Excluding rest

  12. Slide 12: Productivity initiatives delivered EUR 237 million in the quarter

    Productivity initiatives delivered EUR 237 million in the quarter and EUR 427 million year to date Productivity initiatives1 (in millions of EUR unless otherwise stated) 2023 -2025 target Q2 2023 actuals • Simplified organization with reduction of 6.6K roles to date, out of 7K by end of 2023, as par

  13. Slide 13: Strength of our orderbook to fuel growth in next quarters

    Strength of our orderbook to fuel growth in next quarters Indexed order book1,2 development • Order book grew 3% year-on-year including a good order- book-to-sales conversion in the last three quarters 121 124 100 • Order book is a leading indicator of ~40% of Group revenue Q2 2021 Q2 2022 Q2 2023 O

  14. Slide 14: Order intake decline on the back of high comparison base and Russia

    Order intake decline on the back of high comparison base and Russia; strong effort in place to reverse the trend in second half of the year Diagnosis & Treatment Comparable Order Intake growth • Comparable OIT declined 8% in the quarter (-2% excl. 36% Russia) following high comps in last 2-years 16%

  15. Slide 15: Raised outlook for FY 2023 driven by confidence in the execution of our plan

    Raised outlook for FY 2023 driven by confidence in the execution of our plan, while uncertainties remain Provided on January 30, 2023 Revised on July 24, 2023 Low-single-digit Mid-single-digit • Diagnosis & Treatment: Mid-single-digit • Diagnosis & Treatment: High-single-digit Comparable Sales Growt

  16. Slide 16: Restructuring, acquisition-related charges and other items in 2023

    Restructuring, acquisition-related charges and other items in 2023 • Simplified organization with reduction of 6.6K roles to date, out of 7K by end of 2023, as part of Restructuring costs 10K reduction by 2025 ~200 bps • S&RC rightsizing Acquisition-related charges • Post-merger integration costs re

  17. Slide 17: Resolving the recall for patients remains our highest priority

    Resolving the recall for patients remains our highest priority 2023 H1 2023 2023-2025 Finalize recall and testing ~99% of recall units produced; >4.5M Manage impact of proposed units1 w/ patients and care providers Consent Decree Completed all testing and analysis for DS1, DS Go and System One devic

  18. Slide 18: Execution with decisive action as key value driver

    Execution with decisive action as key value driver Enabled by culture of accountability and strong HealthTech capabilities Patient safety and quality Reliable end-to-end Simplified as highest priority supply chain operating model Culture, accountability, End-to-end value chain End-to-end, Competenci

  19. Slide 19: Patient safety and quality as highest priority

    Patient safety and quality as highest priority Examples of our progress in Q2 2023 Patient Safety Advisory Board fully operational, drives deeper engagement with patient organizations, healthcare professionals and industry experts Patient safety Appointed strong Regulatory Affairs & Quality leadersh

  20. Slide 20: Towards a reliable end-to-end supply chain

    Towards a reliable end-to-end supply chain Examples of our progress in Q2 2023 160 PCBAs redesigns completed vs 56 year-end 2022 Reliable end-to-end 1500+ reduced risk for high-risk components vs 700+ year-end 2022 supply chain On track to zero high risk components by end of 2023 ~15% increase in se

  21. Slide 21: Simplified, more agile operating model

    Simplified, more agile operating model Examples of our progress in Q2 2023 Simplified operating model with end-to-end accountability by businesses as well as new performance management cadence live from April 1 with dedicated financial, innovation and quality reviews Simplified Reduced workforce by

  22. Slide 22: Key takeaways

    Key takeaways • Delivered improved operational performance, with better sales, profitability and cash flow • Making progress on our three priorities: ‒ Enhance patient safety & quality ‒ Strengthen supply chain reliability ‒ Establish a simplified, agile operating model • Resolving the Respironics r

  23. Slide 23: Q&A

    Q&A © Koninklijke Philips N.V.

  24. Slide 24: Financial appendix

    Financial appendix © Koninklijke Philips N.V.

  25. Slide 25: Working capital and inventories

    Working capital and inventories Group working capital1 Group inventories (in millions of EUR unless otherwise stated) as % of LTM sales2 (in millions of EUR unless otherwise stated) as % of LTM sales2 18.3% 17.6% 3,000 15.7% 15.7% 20.0% 5,500 26.5% 28% 14.7% 2,500 15.0% 23.9% 4,500 23.1% 22.3% 26% 2

  26. Slide 26: Debt maturity profile and liability management

    Debt maturity profile and liability management Long term debt profile and liability management Debt maturity profile as per 30 June 2023 (in billions of EUR unless otherwise stated) Long-term debt 1 1.6 • Total net debt position of EUR 7.3 Short-term debt2 1.4 Unutilized standby & other committed fa

  27. Slide 27: Capital expenditures, Depreciation and Amortization

    Capital expenditures, Depreciation and Amortization in millions of EUR unless otherwise stated Q2 2022 Q2 2023 Capital expenditures on property, plant and equipment 98 89 Capitalization of development costs 93 71 Depreciation 170 157 Amortization of acquired intangible assets 81 72 Amortization of s

  28. Slide 28: Restructuring, acquisition-related charges and other items

    Restructuring, acquisition-related charges and other items in millions of EUR unless otherwise stated Q1 2022 Q2 2022 2022 FY Q1 2023 Q2 2023 Diagnosis & Treatment 4 9 (136) (66) (39) Restructuring & Acq.-related charges 4 9 (3) (65) (30) Other items - (0) (133)3,5 (1) (10) Connected Care (341) (118

  29. Slide 29: Slide 29

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