Philips’: Philips’ Fourth Quarter and Annual Results 2020

Philips delivers Q4 sales of EUR 6.0 billion, with 7% comparable sales growth; income from continuing operations increases to EUR 608 million, Adjusted EBITA margin improves 110 basis points to 19.0%, and operating cash flow increases to EUR 1,305 million

Fourth-quarter highlights

Sales amounted to EUR 6.0 billion, with 7% comparable sales growth
Comparable order intake increased 7%
Income from continuing operations increased to EUR 608 million, compared to EUR 550 million in Q4 2019
Adjusted EBITA margin increased to 19.0% of sales, compared to 17.9% of sales in Q4 2019
Income from operations improved to EUR 795 million, compared to EUR 730 million in Q4 2019
EPS from continuing operations (diluted) amounted to EUR 0.66; Adjusted EPS increased to EUR 0.94, compared to EUR 0.83 in Q4 2019
Operating cash flow improved to EUR 1,305 million, compared to EUR 1,271 million in Q4 2019
Free cash flow improved to EUR 1,055 million, compared to EUR 959 million in Q4 2019

Full-year highlights

Sales amounted to EUR 19.5 billion, with 3% comparable sales growth
Comparable order intake increased 9%
Income from continuing operations increased to EUR 1,205 million, compared to EUR 1,192 million in 2019
Adjusted EBITA margin was 13.2% of sales, in line with 2019
Income from operations amounted to EUR 1,542 million, compared to EUR 1,644 million in 2019
EPS from continuing operations (diluted) amounted to EUR 1.31; Adjusted EPS amounted to EUR 1.98, in line with 2019
Operating cash flow improved to EUR 2,777 million, compared to EUR 2,031 million in 2019
Free cash flow improved to EUR 1,852 million, compared to EUR 1,053 million in 2019
Proposed dividend of EUR 0.85 per share, in cash or shares at the option of the shareholder


Frans van Houten, CEO of Royal Philips:



“Against the backdrop of the ongoing COVID-19 pandemic, we continued to support healthcare providers and medical staff with the provision of both acute COVID-19 care and regular healthcare. In the quarter, Philips entered into 25 new long-term strategic partnerships with hospitals in the US, Europe and Asia, to help them achieve their clinical and operational goals with our integrated solutions. We also supported consumers in their homes with telehealth solutions such as tele-dentistry services and remote monitoring.

I am pleased that, as a result of these efforts, in the quarter we recorded 7% comparable sales growth for the Group and 7% comparable order intake growth. The Adjusted EBITA margin improved by 110 basis points, and we delivered a strong free cash flow of EUR 1,055 million.

We launched several new products and solutions in the quarter, including the Philips Shaver Series 1000 that specifically addresses the personal care needs of young men in China. We also introduced our next-generation IntelliSpace Portal advanced visualization workspace with AI capabilities to support a precision diagnosis. To expand our Connected Care solutions, we signed agreements to acquire BioTelemetry and Capsule Technologies. These acquisitions will further broaden and scale Philips’ patient care management solutions for the hospital and the home to enhance patient outcomes, streamline clinical workflows and increase productivity. We target significant revenue synergies, and these businesses will be accretive to Philips’ sales growth and Adjusted EBITA margin in 2021. This is another important step in our strategy to become a leading solutions provider.

As a result of our stronger performance in the second half of the year, following a challenging first half due to the impact of COVID-19, our performance was resilient. For the full year 2020 we delivered 3% comparable sales growth, an Adjusted EBITA margin of 13.2% and a strong free cash flow of EUR 1.9 billion. Moreover, driven by 9% comparable order intake growth, we continued to gain market share in our healthcare businesses, and ended the year with a strong order book.

I am very grateful and proud of the commitment, resourcefulness and hard work of our more than 80,000 employees in 2020. Through our efforts, we were able to deliver against our triple duty of care – meeting critical customer needs, safeguarding the health and safety of our employees, and ensuring business continuity.

Looking ahead, we continue to see uncertainty related to the impact of COVID-19 across the world. For 2021, Philips plans to deliver low-single-digit comparable sales growth, driven by solid growth in Diagnosis & Treatment and Personal Health, partly offset by lower Connected Care sales, and an Adjusted EBITA margin improvement of 60-80 basis points.”


Business segment performance


The Diagnosis & Treatment businesses returned to growth, with 1% comparable sales growth in the quarter, driven by high-single-digit growth in Diagnostic Imaging. Comparable order intake showed a 3% increase, compared to a 5% decrease in the previous quarter. The Adjusted EBITA margin decreased to 14.0%, mainly due to mix changes. For the full year, the Diagnosis & Treatment businesses recorded a 2% comparable sales decrease and an Adjusted EBITA margin of 10.0%.

Comparable sales in the Connected Care businesses increased 24% in the quarter, with double-digit growth in Monitoring & Analytics and Sleep & Respiratory Care. Comparable order intake showed a 17% increase, with strong growth across all businesses. The Adjusted EBITA margin increased to 27.2%, due to operating leverage and productivity programs. For the full year, the Connected Care businesses delivered 22% comparable sales growth and an Adjusted EBITA margin of 21.5%.

The Personal Health businesses delivered a comparable sales increase of 5% in the quarter, with double-digit growth in Domestic Appliances and mid-single-digit growth in Personal Care. The Adjusted EBITA margin was 20.0%, in line with Q4 2019. For the full year, the Personal Health businesses recorded a 4% comparable sales decline and an Adjusted EBITA margin of 13.0%.

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


In 2020, Philips’ products and solutions improved the lives of 1.75 billion people, compared to 1.64 billion in 2019. This figure includes 207 million people in underserved communities, compared to 194 million in 2019. In addition, Philips was once again recognized in 2020 for its sustainability performance in the 2020 Dow Jones Sustainability Indices and CDP’s Climate Change A-list.

Philips signed 25 new long-term strategic partnerships in the quarter, including a 5-year technology and innovation partnership with Rennes University Hospital, one of the top 10 hospitals in France, with four sites and more than 1,800 beds. Philips will deliver integrated solutions to support a precision diagnosis, image-guided therapies, and patient monitoring and management. This includes consultancy services to help optimize the hospital’s clinical pathways.

Expanding its range of patient-centric solutions for the home, Philips launched the BiPAP A40 EFL non-invasive ventilator. With this introduction, Philips is extending its respiratory care solutions with a new ventilation therapy feature to treat COPD patients with expiratory flow limitation (EFL) with targeted therapy to reduce symptoms and increase their comfort while sleeping.

Highlighting the company’s strength in enterprise imaging solutions, Philips created a single system for all 12 hospitals in the Region of Southern Denmark to store, retrieve, and view radiology and nuclear medicine images and data. This unified imaging ecosystem, which comprises Philips’ Vendor-Neutral Archive and Universal Viewer, will serve all of the region’s radiologists and nuclear medicine specialists, improving collaboration and enhancing patient care.

Leveraging Philips’ remote patient monitoring capabilities, Philips and BioIntelliSense have been selected by the U.S. Department of Defense to validate BioIntelliSense’s BioSticker sensor for the early detection of COVID-19 symptoms. The validation study aims to accelerate the use of wearable diagnostics for the early identification and containment of pre-symptomatic COVID-19 cases.

Highlighting its leadership in image-guided therapy, there was strong demand for Philips’ mobile surgery solutions, including the Philips Zenition mobile C-arm platform, resulting in double-digit growth for this category during the quarter. Earlier in the year, Philips introduced several new innovations on its Zenition platform to improve the workflow of complex surgical procedures.

Philips launched a vendor-neutral, multimodality Radiology Operations Command Center to enable real-time, remote collaboration between technologists, radiologists and imaging operations teams across multiple sites, with the aim of increasing productivity, minimizing issues with image quality, and expanding access to MR- and CT-based diagnosis.

Cost savings



In the fourth quarter of 2020, cost savings totaled EUR 123 million, with procurement savings of EUR 67 million and savings from overhead and other productivity programs of EUR 56 million, resulting in annual savings of EUR 447 million in 2020. As a result, Philips has delivered EUR 1.9 billion productivity savings for the Group over the 2017-2020 period, exceeding the target of EUR 1.8 billion.