SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER

Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934

January 29, 2024

KONINKLIJKE PHILIPS N.V.

(Exact name of registrant as specified in its charter)

Royal Philips

(Translation of registrant’s name into English)

The Netherlands

(Jurisdiction of incorporation or organization)

Breitner Center, Amstelplein 2, 1096 BC Amsterdam, The Netherlands

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule101(b)(7): ☐

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ☐ No ☒

Name and address of person authorized to receive notices and communications from the Securities and Exchange Commission:

M.J. van Ginneken
Koninklijke Philips N.V.
Amstelplein 2
1096 BC Amsterdam – The Netherlands

This report comprises a copy of the following report:

“Philips’ Fourth Quarter Results 2023”, dated January 29, 2024.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized at Amsterdam, on the 29th day of January 2024.

KONINKLIJKE PHILIPS N.V.

/s/ M.J. van Ginneken
(Chief Legal Officer)

Philips shape

Philips delivers strong full-year results; agrees with FDA on terms of consent decree focused on Philips Respironics in the US

Amsterdam, January 29, 2024

  • Delivers strong sales growth, improved profitability, and strong cash flow in 2023 through solid execution of first year of 2023-2025 plan
  • Agrees with FDA on terms of consent decree focused on Philips Respironics in the US, providing clarity and a roadmap to demonstrate compliance and to restore the business
  • Reiterates confidence in delivering the 2023-2025 plan; further performance improvement in 2024

FY and Q4 Group performance highlights

  • Group sales amounted to EUR 18.2 billion in 2023; EUR 5.1 billion in Q4
  • Comparable sales growth of 7% in 2023; 3% in Q4, excluding provisions charged to sales, mainly connected with the Respironics consent decree*
  • Comparable order intake was -5% in 2023; -3% in Q4; absolute order book remains strong
  • Income from operations was EUR -115 million in 2023; EUR 24 million in Q4, including charges of EUR 363 million connected with the Respironics consent decree
  • Adjusted EBITA margin increased to 10.5% of sales in 2023; 12.5% in Q4, excluding provisions charged to sales, mainly connected with the Respironics consent decree*
  • Free cash flow increased to EUR 1,582 million in 2023; increased to EUR 1,128 million in Q4
  • Restructuring and productivity plan on track, with savings of EUR 956 million in 2023; EUR 271 million in Q4
  • Proposed dividend maintained at EUR 0.85 per share, to be distributed in shares
  • Philips expects to deliver 3-5% comparable sales growth and Adjusted EBITA margin of 11-11.5% in 2024

*See table below

Metrics affected by provisions charged to sales FY 2023 Q4 2023
Sales - as reported in millions of EUR 18,169 5,062
Comparable sales growth - excluding provisions charged to sales1) 7% 3%
Comparable sales growth 6% (1)%
Adjusted EBITA margin - excluding provisions charged to sales 1) 10.5% 12.5%
Adjusted EBITA margin  10.6% 12.9%
1) Excluding provisions charged to sales of EUR 174 million in Q4 2023 mainly in connection with the Respironics consent decree.

Roy Jakobs, CEO of Royal Philips:

“Our strong results in 2023 were driven by solid execution of the first year of our three-year plan to create value with sustainable impact. While there is more work to be done, the progress we achieved in a volatile world lays a solid foundation for sustained performance.

Patient safety and quality remain Philips’ highest priority across the company. Resolving the consequences of the Respironics recall for our patients and customers is a key focus area and I acknowledge and apologize for the distress and concern caused. We are fully committed to complying with the consent decree, which is an important step and provides a clear path forward.

We saw strong growth throughout the year based on the actions we have taken to improve supply chain reliability and simplify our organization. Our order book is strong, and we are focused on improving order intake. Our new operating model enabled more effective ways of working across the company, and drove significant productivity improvements.

We continue to partner with many healthcare systems around the world, supporting them to become more efficient, and addressing their resourcing and productivity challenges with our AI-powered innovations. This includes our newly launched next-generation ultrasound systems, and our unique mobile MRI system with helium-free operations.

We are confident in our plan to help consumers lead healthy lives and healthcare providers deliver efficient, high-quality care to patients in a sustainable way. Based on our ongoing actions to enhance execution, we expect further performance improvement in 2024.”

Philips Respironics consent decree

  • Philips agrees on the terms of a consent decree with the US Department of Justice (DOJ), representing the US Food and Drug Administration (FDA). The consent decree primarily focuses on Philips Respironics’ business operations in the US.
  • The consent decree is being finalized and will be submitted to the relevant US court for approval. The decree will provide Philips Respironics with a roadmap of defined actions, milestones, and deliverables to demonstrate compliance with regulatory requirements and to restore the business.
  • In the US, Philips Respironics will continue to service sleep and respiratory care devices already with healthcare providers and patients, and supply accessories (including patient interfaces), consumables (including patient circuits), and replacement parts (including repair kits). Until the relevant requirements of the consent decree are met, Philips Respironics will not sell new CPAP or BiPAP sleep therapy devices or other respiratory care devices in the US.
  • Outside the US, Philips Respironics will continue to provide new sleep and respiratory care devices, accessories (including patient interfaces), consumables (including patient circuits), replacement parts (including repair kits) and services, subject to certain requirements.
  • As a consequence of addressing this consent decree, which is a multi-year plan, Philips recorded a provision of EUR 363 million in Q4 2023 that relates to remediation activities, inventory write-downs and onerous contract provisions. In 2024, Philips expects around 100 basis points of costs that relate to remediation activities and disgorgement payments for Philips Respironics sales in the US.
  • Further details will become available once the consent decree has been finalized and submitted to the relevant US court for approval.

Outlook

Philips reiterates confidence in delivering the plan for 2023-2025, acknowledging that uncertainties remain. For full-year 2024, Philips expects to deliver 3-5% comparable sales growth and an Adjusted EBITA margin of 11-11.5%. The free cash flow from Philips' businesses is expected to amount to EUR 0.8-1 billion. This only excludes the remaining cash-out related to the previously announced resolution of the economic loss class action in the US. 

The previously stated 2023-2025 Group financial outlook of mid-single-digit comparable sales growth, low-teens Adjusted EBITA margin, and EUR 1.4-1.6 billion free cash flow now takes the consent decree into account and remains unchanged. It excludes the investigation by the US DOJ related to the Respironics field action and the impact of the ongoing litigation.

Segment performance

Diagnosis & Treatment comparable sales increased by 11% in 2023, with double-digit growth in Image Guided Therapy and Precision Diagnosis. The Adjusted EBITA margin improved to 11.6%, compared to 9.5% in 2022, driven by increased sales and pricing & productivity measures, partly offset by cost inflation. In Q4, Diagnosis & Treatment segment comparable sales increased 5%, with high-single-digit growth in Image Guided Therapy. The Adjusted EBITA margin was 10.4%, compared to 12.2% in Q4 2022, due to an unfavorable mix and phasing of production and costs.

Connected Care comparable sales increased by 5%*) in 2023, driven by double-digit growth in Monitoring. The Adjusted EBITA margin increased to 6.9%*), compared to 2.1% in 2022, driven by increased sales and productivity measures, partly offset by cost inflation. In Q4, comparable sales were flat*), with high-single-digit growth in Enterprise Informatics. The Adjusted EBITA margin was 13.3%*), compared to 11.6% in 2022, mainly driven by pricing & productivity measures, partly offset by cost inflation. 

Personal Health comparable sales growth was 3% in 2023, strongly driven by Personal Care. The Adjusted EBITA margin improved to 16.6%, compared to 14.8% in 2022, as a result of increased sales and pricing & productivity measures. In Q4, comparable sales increased by 7%, mainly driven by Personal Care. The Adjusted EBITA margin increased to 19.9%, compared to 17.0% in Q4 2022, mainly driven by increased sales and pricing & productivity measures.

Productivity

Supported by significant change management efforts, to date Philips has reduced the workforce by around 8,000 roles, out of 10,000 roles in total planned by 2025. For the full year, total savings amounted to EUR 956 million. In Q4, operating model productivity savings amounted to EUR 149 million. Procurement savings amounted to EUR 64 million, and other productivity programs delivered savings of EUR 58 million, resulting in total savings of EUR 271 million. 

Customer, innovation and ESG highlights

  • In 2023, Philips’ products and solutions improved the lives of 1.9 billion people, including 222 million people in underserved communities. In addition, Philips was again recognized with a prestigious ‘A’ score for its climate action leadership by global environmental non-profit CDP (formerly Carbon Disclosure Project).
  • Philips was recognized as one of the top health technology companies for its sustainability performance in the global 2023 Dow Jones Sustainability Indices (DJSI) list.
  • As part of its program to expand access to maternal health, Philips is developing an AI-powered ultrasound solution that aims to address the shortage of healthcare workers by putting a diagnostic tool previously reserved for expert technicians in the hands of midwives. The program received total funding of USD 60 million from the Bill & Melinda Gates Foundation.
  • Philips’ 8-year, USD 115 million partnership with NYU Langone Health in the US is aimed at advancing patient safety, quality and outcomes through innovation. Philips will provide AI-enabled solutions, including its latest hospital patient monitoring, diagnostic imaging, digital pathology and enterprise informatics solutions.
  • Philips and Norwegian Vestre Viken Health Trust deployed AI-enabled clinical care providing access to an AI-based bone fracture radiology application that will help radiologists serve the needs of around half a million people across 22 Norwegian municipalities.
  • Philips introduced Philips HealthSuite Imaging, a cloud-based next generation of Philips Vue PACS that offers AI-enabled workflow orchestration, high-speed remote access for diagnostic reading, and integrated reporting to enable healthcare facilities across the world to improve operational efficiency and enhance patient care.
  • Philips launched the premium S9000 shavers with close-shave blade technology. These shavers are available in the US, Western Europe, and China, where they have earned the JD S+ Brand award.

Capital allocation

Philips intends to submit to the 2024 Annual General Meeting of Shareholders a proposal to declare a dividend of EUR 0.85 per common share and to distribute such dividend in shares.

In the fourth quarter, Philips completed the cancellation of 15,134,054 of its shares, resulting in 906,403,156 outstanding shares as of December 31, 2023. The cancelled shares were acquired as part of the EUR 1.5 billion share repurchase program for capital reduction purposes that was announced on July 26, 2021. Philips will complete the share repurchase program in April 2024, which is expected to result in a further cancellation of 4.4 million shares in Q2 2024.

Conference call and audio webcast

Roy Jakobs, CEO, and Abhijit Bhattacharya, CFO, will host a conference call for investors and analysts at 10:00 am CET today to discuss the full year 2023 results. A live webcast of the conference call will be available on the Philips Investor Relations website and can be accessed here. 

 

 

*) Excluding provisions charged to sales of EUR 174 million in Q4 2023 mainly in connection with the Respironics consent decree.

Fourth-quarter highlights

Philips performance

Key data

in millions of EUR unless otherwise stated

  Q4 2022 Q4 2023
Sales 5,422 5,062
Nominal sales growth 10% (7)%
Comparable sales growth1)2) 3% (1)%
Comparable order intake3) (8)% (3)%
Income from operations 171 24
as a % of sales 3.2% 0.5%
Financial expenses, net (78) (92)
Investments in associates, net of income taxes (86) (26)
Income tax (expense) benefit (120) 132
Income from continuing operations (113) 38
Discontinued operations, net of income taxes 8 -
Net income (105) 38
Earnings per common share (EPS)    
Income from continuing operations attributable to shareholders4) (in EUR) - diluted (0.12) 0.04
Adjusted income from continuing operations attributable to shareholders4)  (in EUR) - diluted1) 0.39 0.41
Net income attributable to shareholders4) (in EUR) - diluted (0.11) 0.04
EBITA1) 301 106
as a % of sales 5.6% 2.1%
Adjusted EBITA1) 651 653
as a % of sales2) 12.0% 12.9%
Adjusted EBITDA1) 891 896
as a % of sales 16.4% 17.7%
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information. 2) Excluding provisions charged to sales of EUR 174 million in Q4 2023 mainly in connection with the Respironics consent decree, comparable sales growth was 3% and Adjusted EBITA as a % of sales was 12.5%. The provisions charged to sales similarly affect other metrics as a percentage of sales in the above table. 3) Comparable order intake is presented when discussing the Philips Group’s performance. For the definition of this measure, refer to chapter 12.4, Other Key Performance Indicators, of the Annual Report 2022. 4) Shareholders refers to shareholders of Koninklijke Philips N.V. Per share and weighted average share calculations have been adjusted retrospectively for all periods presented to reflect the issuance of shares for the share dividend in respect of 2022.
  • Comparable sales declined by 1%. Excluding provisions charged to sales of EUR 174 million, mainly in connection with the Respironics consent decree, the increase was 3%. This growth was driven by high-single-digit growth in the Personal Health segment and mid-single-digit growth in the Diagnosis & Treatment segment. 
  • Adjusted EBITA increased to EUR 653 million and the margin improved to 12.9%. Excluding provisions charged to sales of EUR 174 million, mainly in connection with the Respironics consent decree, Adjusted EBITA amounted to 12.5%, compared to 12.0% in Q4 2022, mainly driven by pricing & productivity measures, partly offset by cost inflation.
  • Restructuring, acquisition-related and other charges were EUR 547 million, compared to EUR 350 million in Q4 2022. Q4 2023 includes charges of EUR 363 million in connection with the Respironics consent decree and EUR 52 million Respironics field-action running remediation costs. In addition, it includes charges in relation to quality remediation actions of EUR 100 million. 
  • Financial income and expenses resulted in a net expense of EUR 92 million, compared to EUR 78 million in Q4 2022, mainly from net foreign exchange results including Argentina. 
  • Investments in associates includes impairments and share of results of associates. Q4 2022 mainly included an impairment of EUR 66 million.
  • Income tax expense decreased by EUR 252 million year-on-year,  mainly due to lower income before tax, one-off recognition of tax credits and higher tax incentives in 2023.
  • Net income increased compared to Q4 2022, mainly driven by lower tax charges.

Sales per geographic area1)

in millions of EUR unless otherwise stated

      % change
  Q4 2022 Q4 2023 nominal comparable2)
Western Europe 1,144 1,163 2% 3%
North America 2,283 2,004 (12)% (6)%
Other mature geographies 471 408 (13)% (5)%
Total mature geographies 3,898 3,575 (8)% (4)%
Growth geographies 1,524 1,486 (2)% 7%
Philips Group3) 5,422 5,062 (7)% (1)%
1) Sales per geographic area is reported based on country of destination 2) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information. 3) Excluding provisions charged to sales of EUR 174 million in Q4 2023 mainly in connection with the Respironics consent decree, comparable sales growth was 3%.

Amounts may not add up due to rounding

  • Comparable sales in mature geographies decreased by 4%. Excluding provisions charged to sales of EUR 174 million, mainly in connection with the Respironics consent decree, mature geographies increased by 1%. In growth geographies, sales increased by 7% on a comparable basis, mainly driven by double-digit growth in Middle East & Turkey, Central & Eastern Europe and Latin America, partly offset by Russia & Central Asia.

Cash and cash equivalents balance

in millions of EUR

  Q4 2022 Q4 2023
Beginning cash balance 776 1,155
Free cash flow1) 303 1,128
Net cash flows from operating activities 540 1,310
Net capital expenditures (237) (182)
Other cash flows from investing activities 25 64
Treasury shares transactions (140) (408)
Changes in debt 240 (57)
Other cash flow items (60) (32)
Net cash flows from discontinued operations 28 20
Ending cash balance 1,172 1,869
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information.
  • Net cash flows from operating activities increased significantly, mainly driven by improved working capital management. Net cash flows included a cash-out related to the previously announced resolution of the economic loss class action in the US. 
  • Treasury shares transactions includes share repurchases as part of the EUR 1.5 billion share repurchase program for capital reduction purposes that was announced on July 26, 2021, and share repurchases for Long-Term incentive plans, as well as related withholding tax.
  • Changes in debt in Q4 2022 included the draw-down of EUR 500 million under the EUR 1 billion credit facility that was announced in October 2022, partly offset by a commercial paper repayment of EUR 200 million.

Composition of net debt to group equity1)

in millions of EUR unless otherwise stated

  September 30, 2023 December 31, 2023
Long-term debt 7,273 7,035
Short-term debt 888 654
Total debt 8,162 7,689
Cash and cash equivalents 1,155 1,869
Net debt 7,007 5,820
Shareholders' equity 12,675 12,028
Non-controlling interests 37 33
Group equity 12,712 12,061
Net debt : group equity ratio1) 36:64 33:67
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information.

Performance per segment

Diagnosis & Treatment

Key data

in millions of EUR unless otherwise stated

  Q4 2022 Q4 2023
Sales 2,550 2,497
Sales growth    
Nominal sales growth 13% (2)%
Comparable sales growth1) 6% 5%
Income from operations 186 132
as a % of sales 7.3% 5.3%
EBITA1) 232 163
as a % of sales 9.1% 6.5%
Adjusted EBITA1) 311 259
as a % of sales 12.2% 10.4%
Adjusted EBITDA1) 373 309
as a % of sales 14.6% 12.4%
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information.
  • Comparable sales increased by 5%, with high-single-digit growth in Image Guided Therapy.
  • Comparable sales in growth geographies showed mid-single-digit growth, mainly driven by double-digit growth in Middle East & Turkey, Central & Eastern Europe and Latin America, and low-single-digit growth in China, partly offset by Russia & Central Asia. Mature geographies recorded mid-single-digit growth, driven by all regions.
  • Adjusted EBITA was EUR 259 million and the margin amounted to 10.4%, compared to 12.2% in Q4 2022, mainly due to an unfavorable mix and phasing of production and costs.
  • Restructuring, acquisition-related and other charges amounted to EUR 96 million, compared to EUR 78 million in Q4 2022. Q4 2023 includes EUR 81 million charges in relation to quality remediation actions. In Q1 2024, restructuring, acquisition-related and other charges are expected to total approximately EUR 15 million.

Connected Care

Key data

in millions of EUR unless otherwise stated

  Q4 2022 Q4 2023
Sales 1,622 1,353
Sales growth    
Nominal sales growth 13% (17)%
Comparable sales growth1)2) 4% (11)%
Income from operations (97) (332)
as a % of sales (6.0)% (24.5)%
EBITA1) (19) (287)
as a % of sales (1.2)% (21.2)%
Adjusted EBITA1) 188 203
as a % of sales2) 11.6% 15.0%
Adjusted EBITDA1) 245 275
as a % of sales 15.1% 20.3%
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information. 2) Excluding provisions charged to sales of EUR 174 million in Q4 2023 mainly in connection with the Respironics consent decree, comparable sales growth was 0% and Adjusted EBITA as a % of sales was 13.3%. The provisions charged to sales similarly affect other metrics as a percentage of sales in the above table.
  • Comparable sales decreased by 11%. Excluding provisions charged to sales of EUR 174 million, mainly in connection with the Respironics consent decree, growth was flat, with high-single-digit growth in Enterprise Informatics.
  • Comparable sales in mature geographies showed a double-digit decline, caused by a double-digit decline in North America due to the provisions charged to sales of EUR 174 million, mainly in connection with the Respironics consent decree. Growth geographies showed a mid-single-digit decline, mainly due to a double-digit decline in China, partly offset by double-digit growth in Latin America. 
  • Adjusted EBITA increased to EUR 203 million and the margin improved to 15.0%. Excluding provisions charged to sales of EUR 174 million, mainly in connection with the Respironics consent decree, Adjusted EBITA amounted to 13.3%, compared to 11.6% in Q4 2022, mainly driven by pricing & productivity measures, partly offset by cost inflation.
  • Restructuring, acquisition-related and other charges were EUR 490 million, compared to EUR 207 million in Q4 2022. Q4 2023 includes charges of EUR 363 million in connection with the Respironics consent decree and EUR 52 million Respironics field-action running remediation costs. In addition, it includes EUR 31 million provision for a legal matter and EUR 19 million for quality remediation actions. In Q1 2024, restructuring, acquisition-related and other charges are expected to total approximately EUR 100 million. This includes the costs in relation to the Respironics consent decree.

Personal Health

Key data

in millions of EUR unless otherwise stated

  Q4 2022 Q4 2023
Sales 1,056 1,069
Sales growth    
Nominal sales growth 0% 1%
Comparable sales growth1) (4)% 7%
Income from operations 173 208
as a % of sales 16.4% 19.5%
EBITA1) 177 211
as a % of sales 16.8% 19.7%
Adjusted EBITA1) 180 213
as a % of sales 17.0% 19.9%
Adjusted EBITDA1) 208 243
as a % of sales 19.7% 22.7%
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information.
  • Comparable sales increased by 7%, mainly driven by Personal Care.
  • Comparable sales in growth geographies showed double-digit growth, mainly driven by Middle East & Turkey and China. Mature geographies recorded low-single-digit growth, mainly driven by Western Europe.
  • Adjusted EBITA increased to EUR 213 million and the margin improved to 19.9%, compared to 17.0% in Q4 2022, mainly driven by increased sales and pricing & productivity measures.

Other

Key data

in millions of EUR

  Q4 2022 Q4 2023
Sales 194 143
Income from operations (91) 16
EBITA1) (88) 18
Adjusted EBITA1) of: (28) (23)
IP Royalties 109 67
Innovation (53) (32)
Central costs (73) (69)
Other (11) 11
Adjusted EBITDA1) 64 69
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information.
  • Sales decreased by EUR 51 million, mainly due to the phasing of royalty income within the year.
  • Adjusted EBITA increased by EUR 5 million, mainly driven by cost savings, partly offset by lower royalty income.
  • Restructuring, acquisition-related and other charges amounted to a gain of EUR 40 million, compared to EUR 61 million cost in Q4 2022. Q4 2023 includes a gain of EUR 35 million due to a divestment. In Q1 2024, restructuring, acquisition-related and other charges are expected to total approximately EUR 5 million.

Proposed dividend distribution 

A proposal will be submitted to the Annual General Meeting of Shareholders, to be held on May 7, 2024, to declare a distribution of EUR 0.85 per common share, in common shares, against retained earnings.

If the above dividend proposal is adopted, the shares will be traded ex-dividend as of May 9, 2024, at the New York Stock Exchange and Euronext Amsterdam. In compliance with the listing requirements of the New York Stock Exchange and Euronext Amsterdam, the dividend record date will be May 10, 2024.

The number of share dividend rights entitled to one new common share will be determined based on the volume-weighted average price of all traded common shares of Koninklijke Philips N.V. at Euronext Amsterdam on May 9, 10 and 13, 2024. The company will calculate the number of share dividend rights entitled to one new common share (the ratio), such that the gross dividend in shares will be approximately equal to EUR 0.85. The ratio and the number of shares to be issued will be announced on May 15, 2024. Distribution of the dividend (up to EUR 770 million), with delivery of new common shares and settlement of any fractions in cash, will take place from May 16, 2024.

Further details will be given in the agenda with explanatory notes for the 2024 Annual General Meeting of Shareholders. All information included here remains provisional until then.

Full-year highlights

Philips performance

Key data

in millions of EUR unless otherwise stated

  January to December
  2022 2023
Sales 17,827 18,169
Nominal sales growth 4% 2%
Comparable sales growth1)2) (3)% 6%
Comparable order intake3) (3)% (5)%
Income from operations (1,529) (115)
as a % of sales (8.6)% (0.6)%
Financial expenses, net (200) (314)
Investments in associates, net of income taxes (2) (98)
Income tax (expense) benefit 113 73
Income from continuing operations (1,618) (454)
Discontinued operations, net of income taxes 13 (10)
Net income (1,605) (463)
Earnings per common share (EPS)    
Income from continuing operations to shareholders4) (in EUR) - diluted (1.76) (0.50)
Adjusted income from continuing operations attributable to shareholders4) (in EUR) - diluted1) 0.92 1.25
Net income attributable to shareholders4)per common share (in EUR) - diluted (1.75) (0.51)
EBITA1) 192 183
as a % of sales 1.1% 1.0%
Adjusted EBITA1) 1,318 1,921
as a % of sales2) 7.4% 10.6%
Adjusted EBITDA1) 2,305 2,845
as a % of sales 12.9% 15.7%
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information. 2) Excluding provisions charged to sales of EUR 174 million in Q4 2023 mainly in connection with the Respironics consent decree, comparable sales growth was 7% and Adjusted EBITA as a % of sales was 10.5%. The provisions charged to sales similarly affect other metrics as a percentage of sales in the above table. 3) Comparable order intake is presented when discussing the Philips Group’s performance. For the definition of this measure, refer to chapter 12.4, Other Key Performance Indicators, of the Annual Report 2022. 4) Shareholders refers to shareholders of Koninklijke Philips N.V. Per share and weighted average share calculations have been adjusted retrospectively for all periods presented to reflect the issuance of shares for the share dividend in respect of 2022.
  • Comparable sales increased by 6%. Excluding provisions charged to sales of EUR 174 million, mainly in connection with the Respironics consent decree, comparable sales growth was 7%. This was mainly driven by double-digit growth in the Diagnosis & Treatment segment and mid-single-digit growth in the Connected Care segment. 
  • Income from operations improved to a loss of EUR 115 million, including charges of EUR 575 million Respironics litigation provision, EUR 363 million in connection with the Respironics consent decree, and EUR 224 million Respironics field-action running remediation costs, from a loss of EUR 1,529 million in 2022, which included a charge of EUR 1.5 billion related to goodwill and R&D impairments.
  • Adjusted EBITA increased to EUR 1,921 million and the margin improved to 10.6%. Excluding provisions charged to sales of EUR 174 million, mainly in connection with the Respironics consent decree, Adjusted EBITA amounted to 10.5%, compared to 7.4% in 2022, as a result of increased sales and pricing & productivity measures, partly offset by cost inflation.  
  • Restructuring, acquisition-related and other charges amounted to EUR 1,739 million, compared to EUR 1,127 million in 2022. 2023 includes charges of EUR 575 million Respironics litigation provision, EUR 363 million in connection with the Respironics consent decree, and EUR 224 million Respironics field-action running remediation costs. In addition, it includes EUR 285 million restructuring charges, mainly related to workforce reduction, and charges in relation to quality remediation actions of EUR 175 million.
  • Financial income and expenses resulted in a net expense of EUR 314 million, compared to a net expense of EUR 200 million in 2022. 2023 includes higher interest expense, fair value losses on minority investments and net foreign exchange losses compared to 2022. 
  • Income tax expense increased by EUR 40 million year-on-year, mainly due to the tax effect on the economic loss class-action settlement provision relating to the Respironics recall, partly offset by one-off recognition of tax credits in 2023.
  • Net income in 2023 improved, driven by higher earnings, offset by EUR 575 million Respironics litigation provision. Net income in 2022 included a charge of EUR 1.5 billion related to goodwill and R&D impairments.

Cash and cash equivalents balance

in millions of EUR

  January to December
  2022 2023
Beginning cash and cash equivalents
balance 		2,303 1,172
Free cash flow1) (961) 1,582
Net cash flows from operating activities (173) 2,136
Net capital expenditures (788) (554)
Other cash flows from investing activities (698) (82)
Treasury shares transactions (174) (662)
Changes in debt 1,092 (181)
Dividend paid to shareholders (412) (2)
Other cash flow items 34 (81)
Net cash flows discontinued operations (12) 123
Ending cash and cash equivalents balance 1,172 1,869
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information.
  • Net cash flows from operating activities increased, mainly as a result of higher earnings and improved working capital management. Net cash flows included a cash-out related to the previously announced resolution of the economic loss class action in the US. 
  • Net capital expenditures decreased, driven by lower investments in fixed assets and cash proceeds from the sale of real estate.
  • Other cash flows from investing activities showed an outflow of EUR 82 million in 2023, compared to EUR 698 million in 2022, which included the acquisitions of Vesper Medical and Cardiologs.
  • Treasury shares transactions mainly includes share repurchases for capital reduction and for Long-Term Incentive purposes, as well as related withholding tax.
  • Changes in debt in 2022 mainly included new bonds issued of EUR 2 billion, partly offset by bond repayments of EUR 1.2 billion.
  • The 2022 dividend was distributed in May 2023 fully in common shares.
  • Net cash flows from discontinued operations in 2023 reflects a tax refund related to a previously divested business.

Composition of net debt to group equity1)

in millions of EUR unless otherwise stated

  December 31, 2022 December 31, 2023
Long-term debt 7,270 7,035
Short-term debt 931 654
Total debt 8,201 7,689
Cash and cash equivalents 1,172 1,869
Net debt 7,028 5,820
Shareholders' equity 13,249 12,028
Non-controlling interests 34 33
Group equity 13,283 12,061
Net debt : group equity ratio1) 35:65 33:67
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information.
  • The decrease in net debt to group equity is mainly due to net cash inflows, partly offset by currency translation reductions of equity.

Performance per segment

Diagnosis & Treatment

Key data

in millions of EUR unless otherwise stated

  January to December
  2022 2023
Sales 8,290 8,818
Sales growth    
Nominal sales growth 6% 6%
Comparable sales growth1) (1)% 11%
Income from operations 538 720
as a % of sales 6.5% 8.2%
EBITA1) 652 816
as a % of sales 7.9% 9.3%
Adjusted EBITA1) 788 1,026
as a % of sales 9.5% 11.6%
Adjusted EBITDA1) 1,008 1,239
as a % of sales 12.2% 14.1%
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information.
  • Comparable sales increased by 11%, driven by double-digit growth in Image Guided Therapy and Precision Diagnosis.
  • Comparable sales in mature and growth geographies showed double-digit growth, with strong contributions from North America, Western Europe and China.
  • Adjusted EBITA increased to EUR 1,026 million and the margin improved to 11.6%, compared to 9.5% in 2022, driven by increased sales and pricing & productivity measures, partly offset by cost inflation.
  • Restructuring, acquisition-related and other charges amounted to EUR 210 million, compared to EUR 136 million in 2022. 2023 includes EUR 81 million charges in relation to quality remediation actions and EUR 73 million restructuring charges, mainly related to workforce reduction. 

Connected Care

Key data

in millions of EUR unless otherwise stated

  January to December
  2022 2023
Sales 5,268 5,138
Sales growth    
Nominal sales growth (2)% (2)%
Comparable sales growth1)2) (9)% 1%
Income from operations (2,347) (1,199)
as a % of sales (44.6)% (23.3)%
EBITA1) (764) (1,020)
as a % of sales (14.5)% (19.9)%
Adjusted EBITA1) 111 369
as a % of sales2) 2.1% 7.2%
Adjusted EBITDA1) 394 623
as a % of sales 7.5% 12.1%
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information. 2) Excluding provisions charged to sales of EUR 174 million in Q4 2023 mainly in connection with the Respironics consent decree, comparable sales growth was 5% and Adjusted EBITA as a % of sales was 6.9%. The provisions charged to sales similarly affect other metrics as a percentage of sales in the above table.
  • Comparable sales increased by 1%. Excluding provisions charged to sales of EUR 174 million, mainly in connection with the Respironics consent decree, growth was 5%, driven by double-digit growth in Monitoring.
  • Comparable sales in growth geographies showed high-single-digit growth, driven by double-digit growth in Latin America and high-single-digit growth in China. In mature geographies, growth was flat. Excluding provisions charged to sales of EUR 174 million, mainly in connection with the Respironics consent decree, mature geographies showed mid-single digit growth, mainly driven by mid-single-digit growth in North America and high-single-digit growth in other mature geographies.
  • Income from operations improved to a loss of EUR 1,199 million, including charges of EUR 575 million Respironics litigation provision, EUR 363 million in connection with the Respironics consent decree, and EUR 224 million Respironics field-action running remediation costs, from a loss of EUR 2,347 million in 2022, which included a EUR 1.3 billion goodwill impairment in Sleep & Respiratory Care.
  • Adjusted EBITA increased to EUR 369 million and the margin improved to 7.2%. Excluding provisions charged to sales of EUR 174 million, mainly in connection with the Respironics consent decree, Adjusted EBITA margin amounted to 6.9%, compared to 2.1% in 2022, driven by increased sales and productivity measures, partly offset by cost inflation. 
  • Restructuring, acquisition-related and other charges were EUR 1,390 million, compared to EUR 875 million in 2022. 2023 includes charges of EUR 575 million Respironics litigation provision, EUR 363 million in connection with the Respironics consent decree, and EUR 224 million Respironics field-action running remediation costs. In addition, it includes EUR 64 million restructuring charges, mainly related to workforce reduction, and charges in relation to quality remediation actions of EUR 94 million.

Personal Health

Key data

in millions of EUR unless otherwise stated

  January to December
  2022 2023
Sales 3,626 3,602
Sales growth    
Nominal sales growth 6% (1)%
Comparable sales growth1) 0% 3%
Income from operations 515 552
as a % of sales 14.2% 15.3%
EBITA1) 531 567
as a % of sales 14.6% 15.7%
Adjusted EBITA1) 538 597
as a % of sales 14.8% 16.6%
Adjusted EBITDA1) 652 698
as a % of sales 18.0% 19.4%
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information.
  • Comparable sales increased by 3%, strongly driven by Personal Care.
  • Comparable sales in mature geographies showed low-single-digit growth, driven by mid-single-digit growth in Western Europe, partly offset by a decline in North America. Growth geographies recorded mid-single-digit growth, driven by double-digit growth in Middle East & Turkey and high-single-digit growth in China, partly offset by a decline in Russia & Central Asia.
  • Adjusted EBITA increased to EUR 597 million and the margin improved to 16.6%, compared to 14.8% in 2022, as a result of increased sales and pricing & productivity measures.
  • Restructuring, acquisition-related and other charges amounted to EUR 31 million, compared to EUR 7 million in 2022. 2023 includes a EUR 23 million investment re-measurement loss and restructuring charges of EUR 9 million, mainly related to workforce reduction. 

Other

Key data

in millions of EUR

  January to December
  2022 2023
Sales 643 612
Income from operations (235) (188)
EBITA1) (227) (179)
Adjusted EBITA1) of: (119) (71)
IP Royalties 322 309
Innovation (165) (142)
Central costs (258) (240)
Other (18) 1
Adjusted EBITDA1) 250 284
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information.
  • Sales decreased by EUR 31 million, mainly due to lower royalties.
  • Adjusted EBITA increased by EUR 48 million, mainly due to cost savings, partly offset by lower royalty income.
  • Restructuring, acquisition-related and other charges amounted to EUR 108 million, in line with 2022. 2023 includes EUR 139 million restructuring charges, mainly related to workforce reduction, and a gain of EUR 35 million due to a divestment.

Forward-looking statements and other important information

Forward-looking statements

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 business of Philips and certain of the plans and objectives of Philips with respect to these items. Examples of forward-looking statements include statements made about our strategy, estimates of sales growth, future Adjusted EBITA *), future restructuring and acquisition related charges and other costs, future developments in Philips’ organic business and the completion of acquisitions and divestments. Forward-looking statements can be identified generally as those containing words such as “anticipates”, “assumes”, “believes”, “estimates”, “expects”, “should”, “will”, “will likely result”, “forecast”, “outlook”, “projects”, “may” or similar expressions. By their nature, these statements involve risk and uncertainty because they relate to future events and circumstances and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these statements.

These factors include but are not limited to: Philips’ ability to gain leadership in health informatics in response to developments in the health technology industry; Philips’ ability to transform its business model to health technology solutions and services; macroeconomic and geopolitical changes; integration of acquisitions and their delivery on business plans and value creation expectations; securing and maintaining Philips’ intellectual property rights, and unauthorized use of third-party intellectual property rights; Philips’ ability to meet expectations with respect to ESG-related matters; failure of products and services to meet quality or security standards, adversely affecting patient safety and customer operations; breaches of cybersecurity; challenges in connection with Philips’ strategy to improve execution and other business performance initiatives; the resilience of our supply chain; attracting and retaining personnel; challenges to drive operational excellence and speed in bringing innovations to market; compliance with regulations and standards including quality, product safety and (cyber) security; compliance with business conduct rules and regulations including privacy and upcoming ESG disclosure and due diligence requirements; treasury and financing risks; tax risks; reliability of internal controls, financial reporting and management process; global inflation. As a result, Philips’ actual future results may differ materially from the plans, goals and expectations set forth in such forward-looking statements. For a discussion of factors that could cause future results to differ from such forward-looking statements, see also the Risk management chapter included in the Annual Report 2022. Reference is also made to section Risk management in the Philips semi-annual report 2023.

Israel

The risk factors discussed in Philips’ Annual Report 2022 (section 6.3) include the strategic risk that the company’s global operations are exposed to geopolitical and macroeconomic changes. The current situation in Israel further increases economic and political uncertainty and may affect the company’s results of operations, financial position and cash flows. Philips is present in Israel with several subsidiaries, mainly in Diagnosis & Treatment and Connected Care, that are primarily involved in manufacturing and research and development (R&D) activities. Please refer to our 2022 Country Activity and Tax Report (p. 37) for further information on our activities in Israel.

Respironics

Philips has recognized a provision related to the voluntary recall notification in the US/field safety notice outside the US for certain sleep and respiratory care products, based on Philips’ best estimate for the expected field actions. Future developments are subject to uncertainties, which require management to make estimates and assumptions. Actual outcomes in future periods may differ from these estimates and affect the company’s results of operations, financial position and cash flows. Furthermore, Philips is a defendant in several class-action lawsuits and individual personal injury claims, and is in the process of finalizing a consent decree with the FDA. Given the uncertain nature of the relevant events, and of their potential financial and operational impact and associated obligations, if any, the company has not made any legal provisions in the accounts for these matters, except for the following. In the first quarter of 2023, Philips Respironics recorded a provision in connection with an anticipated resolution of the economic loss class action pending in the US. The provision is subject to final court approval of the negotiated settlement agreement and is based on Philips’ best estimate for the expected settlement amounts, which is, in part, based on the expected number of claims ultimately filed pursuant the settlement once it is approved. Actual outcomes in future periods of the above matters may differ from these estimates and affect the company’s results of operations, financial positions and cash flows.

Third-party market share data

Statements regarding market share, contained in this document, including those regarding Philips’ competitive position, are based on outside sources such as specialized research institutes, industry and dealer panels in combination with management estimates. Where information is not yet available to Philips, market share statements may also be based on estimates and projections prepared by management and/or based on outside sources of information. Management’s estimates of rankings are based on order intake or sales, depending on the business.

Market Abuse Regulation

This press release contains inside information within the
meaning of Article 7(1) of the EU Market Abuse Regulation.

Use of non-IFRS information

In presenting and discussing the Philips Group’s financial
position, operating results and cash flows, management uses
certain non-IFRS financial measures. These non-IFRS financial
measures should not be viewed in isolation as alternatives to
the equivalent IFRS measure and should be used in conjunction
with the most directly comparable IFRS measures. Non-IFRS
financial measures do not have standardized meaning under
IFRS and therefore may not be comparable to similar measures
presented by other issuers. A reconciliation of these non-IFRS
measures to the most directly comparable IFRS measures is
contained in this document. Further information on non-IFRS
measures can be found in the Annual Report 2022.

Presentation

All amounts are in millions of euros unless otherwise stated.
Due to rounding, amounts may not add up precisely to totals
provided. All reported data is unaudited. Financial reporting is
in accordance with the accounting policies as stated in the
Annual Report 2022. Prior-period amounts have been
reclassified to conform to the current-period presentation.

Philips has realigned the composition of its reporting segments
effective from April 1, 2023. The most notable change is the
shift of the previous Enterprise Diagnostic Informatics business
from the Diagnosis & Treatment segment to the Connected
Care segment. This business, together with other informatics
solutions in the Connected Care segment, now forms the
Enterprise Informatics business. Accordingly, the comparative
figures for the affected segments have been restated. The
restatement has been published on the Philips Investor
Relations website and can be accessed here.

Per share calculations have been adjusted retrospectively for all
periods presented to reflect the issuance of shares for the share
dividend in respect of 2022.

*) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information.

Condensed consolidated statements of income

in millions of EUR unless otherwise stated

  Q4 January to December
  2022 2023 2022 2023
Sales 5,422 5,062 17,827 18,169
Cost of sales (3,201) (3,263) (10,633) (10,721)
Gross margin 2,221 1,798 7,194 7,448
Selling expenses (1,283) (1,220) (4,621) (4,524)
General and administrative expenses (195) (143) (671) (608)
Research and development expenses (501) (449) (2,091) (1,890)
Impairment of goodwill (27) (8) (1,357) (8)
Other business income 26 50 127 112
Other business expenses (70) (6) (109) (645)
Income from operations 171 24 (1,529) (115)
Financial income 14 17 58 63
Financial expenses (92) (109) (258) (376)
Investment in associates, net of income taxes (86) (26) (2) (98)
Income before taxes 7 (94) (1,731) (526)
Income tax (expense) benefit (120) 132 113 73
Income from continuing operations (113) 38 (1,618) (454)
Discontinued operations, net of income taxes 8 - 13 (10)
Net income (105) 38 (1,605) (463)
         
Attribution of net income        
Net income attributable to shareholders1) (106) 39 (1,608) (466)
Net income attributable to non-controlling interests - (1) 3 2
Income from continuing operations attributable to shareholders1) (113) 39 (1,622) (456)
         
Earnings per common share        
Weighted average number of common shares outstanding (after deduction of treasury shares) during the period (in thousands)2):        
- basic 922,202 910,823 920,951 917,440
- diluted 922,202 927,301 920,951 917,440
Income from continuing operations attributable to shareholders1) (in EUR)2)        
- basic (0.12) 0.04 (1.76) (0.50)
- diluted (0.12) 0.04 (1.76) (0.50)
Net income attributable to shareholders1) (in EUR)2)        
- basic (0.11) 0.04 (1.75) (0.51)
- diluted (0.11) 0.04 (1.75) (0.51)
1) Shareholders refers to shareholders of Koninklijke Philips N.V. 2) Per share calculations have been adjusted retrospectively for all periods presented to reflect the issuance of shares for the share dividend in respect of 2022.

Amounts may not add up due to rounding.

Condensed statements of comprehensive income

In millions of EUR

  January to December
  2022 2023
Net income for the period (1,605) (463)
     
Pensions and other post employment plans:    
Remeasurement, before tax 101 (26)
Income tax effect on remeasurements (20) 3
     
Financial assets fair value through OCI:    
Net current-period change, before tax (32) (20)
Income tax effect on net current-period change 1 3
Total of items that will not be reclassified to Income statement 49 (40)
     
Currency translation differences:    
Net current-period change, before tax 748 (579)
Income tax effect on net current-period change 2 -
Reclassification adjustment for (gain) loss realized - (26)
Reclassification adjustment for (gain) loss realized, in discontinued operations    
     
Cash flow hedges:    
Net current-period change, before tax (29) 29
Income tax effect on net current-period change (10) (2)
Reclassification adjustment for (gain) loss realized 63 (19)
Total of items that are or may be reclassified to Income Statement 774 (597)
     
Other comprehensive income for the period 823 (637)
     
Total comprehensive income for the period (782) (1,100)
     
Total comprehensive income (loss) attributable to:    
Shareholders of Koninklijke Philips N.V. (786) (1,101)
Non-controlling interests 4 1

Amounts may not add up due to rounding.

Condensed consolidated balance sheets

in millions of EUR

  December 31, 2022 December 31, 2023
Non-current assets:    
Property, plant and equipment 2,638 2,483
Goodwill 10,238 9,876
Intangible assets excluding goodwill 3,526 3,190
Non-current receivables 279 193
Investments in associates 537 381
Other non-current financial assets 660 619
Non-current derivative financial assets 4 3
Deferred tax assets 2,449 2,627
Other non-current assets 98 93
Total non-current assets 20,429 19,466
     
Current assets:    
Inventories 4,049 3,491
Other current financial assets 11 3
Other current assets 490 500
Current derivative financial assets 123 45
Income tax receivable 222 220
Current receivables 4,115 3,733
Assets classified as held for sale 77 79
Cash and cash equivalents 1,172 1,869
Total current assets 10,259 9,940
Total assets 30,688 29,406
     
Equity:    
Equity 13,249 12,028
Common shares 178 183
Capital in excess of par value 5,025 5,827
Reserves 1,488 879
Other 6,558 5,139
Non-controlling interests 34 33
Group equity 13,283 12,061
     
Non-current liabilities:    
Long-term debt 7,270 7,035
Non-current derivative financial liabilities 4 3
Long-term provisions 1,097 1,035
Deferred tax liabilities 91 71
Non-current contract liabilities 515 469
Non-current tax liabilities 435 390
Other non-current liabilities 60 54
Total non-current liabilities 9,471 9,058
     
Current liabilities:    
Short-term debt 931 654
Current derivative financial liabilities 207 40
Income tax payable 40 83
Accounts payable 1,968 1,917
Accrued liabilities 1,626 1,887
Current contract liabilities 1,696 1,809
Short-term provisions 1,018 1,463
Dividend payable   11
Liabilities directly associated with assets held for sale - 9
Other current liabilities 448 414
Total current liabilities 7,934 8,287
Total liabilities and group equity 30,688 29,406

Amounts may not add up due to rounding.

Condensed consolidated statements of cash flows

in millions of EUR

  January to December
  2022 2023
Cash flows from operating activities:    
Net income (loss) (1,605) (463)
Results of discontinued operations - net of income tax (13) 10
Adjustments to reconcile net income to net cash provided by (used for) operating activities:    
Depreciation, amortization and impairment of assets 1,602 1,261
Impairment of goodwill 1,357 8
Share-based compensation 95 88
Net loss (gain) on sale of assets (115) (71)
Interest income (25) (46)
Interest expense on debt, borrowings and other liabilities 226 255
Investments in associates, net of income taxes 112 107
Income taxes (113) (71)
Decrease (increase) in working capital: (862) 913
Decrease (increase) in receivables and other current assets (342) 298
Decrease (increase) in inventories (572) 257
Increase (decrease) in accounts payable, accrued and other current liabilities 52 358
Decrease (increase) in non-current receivables and other assets 1 (33)
Increase (decrease) in other liabilities (84) (38)
Increase (decrease) in provisions (199) 422
Other items (39) 129
Interest received 15 53
Interest paid (205) (250)
Dividends received from investments in associates 12 13
Income taxes paid (333) (152)
Net cash provided by (used for) operating activities (173) 2,136
Cash flows from investing activities:    
Net capital expenditures (788) (554)
Purchase of intangible assets (105) (96)
Expenditures on development assets (257) (203)
Capital expenditures on property, plant and equipment (444) (345)
Proceeds from sales of property, plant and equipment 18 90
Net proceeds from (cash used for) derivatives and current financial assets (72) (46)
Purchase of other non-current financial assets (116) (92)
Proceeds from other non-current financial assets 78 48
Purchase of businesses, net of cash acquired (712) (73)
Net proceeds from sale of interests in businesses, net of cash disposed of 124 80
Net cash provided by (used for) investing activities (1,487) (636)
Cash flows from financing activities:    
Proceeds from issuance of (payments on) short-term debt 47 29
Principal payments on short-term portion of long-term debt (1,472) (754)
Proceeds from issuance of long-term debt 2,516 544
Re-issuance of treasury shares 12  
Purchase of treasury shares (187) (662)
Dividend paid to shareholders1) (412) (2)
Dividend paid to shareholders of non-controlling interests (6) (3)
Net cash provided by (used for) financing activities 500 (848)
     
Net cash provided by (used for) continuing operations (1,160) 652
Net cash provided by (used for) discontinued operations (12) 123
Net cash provided by (used for) continuing and discontinued operations (1,172) 776
Effect of changes in exchange rates on cash and cash equivalents 41 (79)
Cash and cash equivalents at the beginning of the period 2,303 1,172
Cash and cash equivalents at the end of the period 1,172 1,869
1) Shareholders refers to shareholders of Koninklijke Philips N.V.

For a number of reasons, principally the effects of translation differences, certain items in the statements of cash flows do not correspond to the differences between the balance sheet amounts for the respective items. Amounts may not add up due to rounding.

Condensed consolidated statements of change in equity

In millions of EUR

 

Common shares

Capital in excess of par value

Fair value through OCI

Cash flow hedges

Currency translation differences

  

Retained earnings

Treasury shares at cost

Total shareholders' equity

Non-controlling interests

Group equity
      reserves   other      
                 
Balance as of January 1, 2022 177 4,646 (344) (25) 1,117   9,344 (476) 14,438 36 14,475
Total comprehensive income (loss)     (32) 23 749   (1,527)   (786) 4 (782)
Dividend distributed 3 326         (741)   (412) (6) (418)
Transfer of gain on disposal of equity investments at FVTOCI to retained earnings     (1)       1   -   -
Purchase of treasury shares             - (24) (24)   (24)
Re-issuance of treasury shares   (43)         (28) 77 7   7
Forward contracts             76 (140) (64)   (64)
Share call options             5 (12) (6)   (6)
Cancellation of treasury shares (2)           (298) 299      
Share-based compensation plans   95             95   95
Income tax share-based compensation plans   1             1   1
Balance as of December 31, 2022 178 5,025 (376) (2) 1,866   6,832 (275) 13,249 34 13,283
                       
Balance as of January 1, 2023 178 5,025 (376) (2) 1,866   6,832 (275) 13,249 34 13,283
Total comprehensive income (loss)     (17) 8 (604)   (488)   (1,101) 1 (1,100)
Dividend distributed 8 741         (816)   (68) (3) (70)
Transfer of gain on disposal of equity investments at FVTOCI to retained earnings     4       (4)   -   -
Purchase of treasury shares             -   -   -
Re-issuance of treasury shares   (29)         (24) 54 -   -
Forward contracts             465 (608) (143)   (143)
Share call options                      
Cancellation of treasury shares (3)           (563) 566      
Share-based compensation plans   88             88   88
Income tax share-based compensation plans   2             2   2
Balance as of December 31, 2023 183 5,827 (390) 6 1,263   5,402 (262) 12,028 33 12,061

Amounts may not add up due to rounding.

Reconciliation of non-IFRS information

Certain non-IFRS financial measures are presented when discussing the Philips Group’s performance:

  • Comparable sales growth
  • Adjusted income from continuing operations attributable to shareholders
  • Adjusted income from continuing operations attributable to shareholders per common share (in EUR) - diluted (Adjusted EPS)
  • EBITA
  • Adjusted EBITA
  • Adjusted EBITDA
  • Free cash flow
  • Net debt : group equity ratio, refer to Fourth-quarter highlights and Full-year highlights

For the definitions of the non-IFRS financial measures listed above, refer to chapter 12.3, Reconciliation of non-IFRS information, of the Annual Report 2022 and to the Forward-looking statements and other important information.

Sales growth composition

in %

  Q4 2023 January to December
  nominal growth consolidation changes currency effects comparable growth nominal growth consolidation changes currency effects comparable growth
2023 versus 2022                
Diagnosis & Treatment (2.1)% 0.0% 6.7% 4.6% 6.4% 0.2% 4.5% 11.1%
Connected Care (16.6)% 0.6% 4.8% (11.2)% (2.5)% 0.3% 3.3% 1.1%
Personal Health 1.3% 0.0% 5.7% 7.0% (0.7)% 0.0% 3.9% 3.2%
Philips Group (6.6)% 0.3% 5.8% (0.6)% 1.9% 0.2% 3.9% 6.0%

Adjusted income from continuing operations attributable to shareholders1)

in millions of EUR unless otherwise stated

  Q4 January to December
  2022 2023 2022 2023
Net income (105) 38 (1,605) (463)
Discontinued operations, net of income taxes (8) - (13) 10
Income from continuing operations (113) 38 (1,618) (454)
Income from continuing operations attributable to non-controlling interests - 1 (3) (2)
Income from continuing operations attributable to shareholders (113) 39 (1,622) (456)
Adjustments for:        
Amortization and impairment of acquired intangible assets 104 74 363 290
Impairment of goodwill 27 8 1,357 8
Restructuring and acquisition-related charges 117 49 202 381
Other items: 233 498 925 1,358
Respironics litigation provision       575
Respironics field-action connected to the anticipated consent decree2) 85 363 250 363
Respironics field-action running remediation costs 63 52 210 224
Quality remediation actions   100 59 175
Investment re-measurement loss       23
Portfolio realignment charges     109  
R&D project impairments     134  
Provision for a legal matter2) 60 31 60 31
Impairment of assets in S&RC     39  
Gain on divestment of business   (35)   (35)
Remaining items 26 (12) 63 2
Net finance expenses - 4 (4) 18
Tax impact of adjusted items and tax only adjusting items (7) (293) (376) (450)
Adjusted income from continuing operations attributable to shareholders1) 360 381 845 1,148
Earnings per common share:        
Income from continuing operations attributable to shareholders3) per common share (in EUR) - diluted (0.12) 0.04 (1.76) (0.50)
Adjusted income from continuing operations attributable to shareholders3) per common share (EUR) - diluted 0.39 0.41 0.92 1.25
1) Shareholders refers to shareholders of Koninklijke Philips N.V. 2) Including provisions charged to sales of EUR 174 million in Q4 2023 mainly in connection with the Respironics consent decree. 3) Shareholders refers to shareholders of Koninklijke Philips N.V. Per share and weighted average share calculations have been adjusted retrospectively for all periods presented to reflect the issuance of shares for the share dividend in respect of 2022.

Reconciliation of Net income to Adjusted EBITA and Adjusted EBITDA

in millions of EUR

  Philips Group Diagnosis & Treatment Connected Care Personal Health Other
Q4 2023          
Net income 38        
Discontinued operations, net of income taxes -        
Income tax expense (132)        
Investments in associates, net of income taxes 26        
Financial expenses 109        
Financial income (17)        
Income from operations 24 132 (332) 208 16
Amortization and impairment of acquired intangible assets 74 24 45 4 2
Impairment of goodwill 8 8      
EBITA 106 163 (287) 211 18
Restructuring and acquisition-related charges 49 15 37 2 (4)
Other items: 498 81 453   (36)
Respironics field-action connected to the anticipated consent decree1) 363   363    
Respironics field-action running remediation costs 52   52    
Quality remediation actions 100 81 19    
Provision for a legal matter1) 31   31    
Gain on divestment of business (35)       (35)
Remaining items (12)   (11)   (1)
Adjusted EBITA 653 259 203 213 (23)
Depreciation, amortization and impairment of fixed assets and other intangible assets 253 50 82 30 92
Adding back impairment of fixed assets included in Restructuring and acquisition-related charges and Other items (11) - (10)   (1)
Adjusted EBITDA 896 309 275 243 69
           
January to December 2023          
Net income (463)        
Discontinued operations, net of income taxes 10        
Income tax benefit (73)        
Investments in associates, net of income taxes 98        
Financial expenses 376        
Financial income (63)        
Income from operations (115) 720 (1,199) 552 (188)
Amortization and impairment of acquired intangible assets 290 89 178 14 9
Impairment of goodwill 8 8 -    
EBITA 183 816 (1,020) 567 (179)
Restructuring and acquisition-related charges 381 118 115 9 140
Other items: 1,358 92 1,275 22 (32)
Respironics litigation provision 575   575    
Respironics field-action connected to the anticipated consent decree1) 363   363    
Respironics field-action running remediation costs 224   224    
Quality remediation actions 175 81 94    
Provision for a legal matter1) 31   31    
Investment re-measurement loss 23     23  
Gain on divestment of business (35)       (35)
Remaining items 2 11 (12) (1) 3
Adjusted EBITA 1,921 1,026 369 597 (71)
Depreciation, amortization and impairment of fixed assets and other intangible assets 971 217 267 101 385
Adding back impairment of fixed assets included in Restructuring and acquisition-related charges and Other items (47) (4) (14)   (30)
Adjusted EBITDA 2,845 1,239 623 698 284
           
Q4 2022          
Net income (105)        
Discontinued operations, net of income taxes (8)        
Income tax benefit 120        
Investments in associates, net of income taxes 86        
Financial expenses 92        
Financial income (14)        
Income from operations 171 186 (97) 173 (91)
Amortization and impairment of acquired intangible assets 104 46 51 4 3
Impairment of goodwill 27   27    
EBITA 301 232 (19) 177 (88)
Restructuring and acquisition-related charges 117 18 49 10 39
Other items: 233 60 158 (6) 22
Respironics field-action provision 85   85    
Respironics field-action running remediation costs 63   63    
Provision for a legal matter 60 60      
Remaining items 26 - 10 (6) 22
Adjusted EBITA 651 311 188 180 (28)
Depreciation, amortization and impairment of fixed assets and other intangible assets 277 62 71 28 116
Adding back impairment of fixed assets included in Restructuring and acquisition-related charges and Other items (37) 1 (13) 0 (24)
Adjusted EBITDA 891 373 245 208 64
           
January to December 2022          
Net income (1,605)        
Discontinued operations, net of income taxes (13)        
Income tax benefit (113)        
Investments in associates, net of income taxes 2        
Financial expenses 258        
Financial income (58)        
Income from operations (1,529) 538 (2,347) 515 (235)
Amortization and impairment of acquired intangible assets 363 115 226 15 8
Impairment of goodwill 1,357   1,357    
EBITA 192 652 (764) 531 (227)
Restructuring and acquisition-related charges 202 3 125 11 62
Other items: 925 133 750 (4) 46
Respironics field-action provision 250   250    
Respironics field-action running remediation costs 210   210    
R&D project impairments 134 73 59 3  
Portfolio realignment charges 109   109    
Provision for a legal matter 60 60      
Quality remediation actions 59   59    
Impairment of assets in S&RC 39   39    
Remaining items 63 - 24 (6) 46
Adjusted EBITA 1,318 788 111 538 (119)
Depreciation, amortization and impairment of fixed assets and other intangible assets 1,239 302 420 117 400
Adding back impairment of fixed assets included in Restructuring and acquisition-related charges and Other items (252) (83) (136) (3) (30)
Adjusted EBITDA 2,305 1,008 394 652 250
1) Including provisions charged to sales of EUR 174 million in Q4 2023 mainly in connection with the Respironics consent decree.

Reconciliation of Net income to Adjusted EBITDA

in millions of EUR

  Philips Group Diagnosis & Treatment Connected Care Personal Health Other
Q4 2023          
Net income 38        
Discontinued operations, net of income taxes 0        
Income tax expense (132)        
Investments in associates, net of income taxes 26        
Financial expenses 120        
Financial income (28)        
Income from operations 24 132 (332) 208 16
Depreciation, amortization and impairments of fixed assets 328 73 126 34 95
Impairment of goodwill 8 8      
Restructuring and acquisition-related charges 49 15 37 2 (4)
Other items: 498 81 453 0 (36)
Respironics field-action provision err   err    
Respironics field-action running remediation costs 52   52    
Provision for a legal matter 31 err      
Remaining items (12) err (11) err (1)
Adding back impairment of fixed assets included in Restructuring and acquisition-related charges and Other items (11) - (10) - (1)
Adjusted EBITDA 896 309 275 243 69
           
January to December 2023          
Net income (463)        
Discontinued operations, net of income taxes 10        
Income tax benefit (73)        
Investments in associates, net of income taxes 98        
Financial expenses 350        
Financial income (36)        
Income from operations (115) 720 (1,199) 552 (188)
Depreciation, amortization and impairments of fixed assets 1,261 306 445 115 394
Impairment of goodwill 8 8 0    
Restructuring and acquisition-related charges 381 118 115 9 140
Other items: 1,358 92 1,275 22 (32)
Respironics field-action provision err   err    
Respironics field-action running remediation costs 224   224    
R&D project impairments  err err err err  
Portfolio realignment charges err   err    
Impairment of assets in S&RC err   err    
Provision for a legal matter 31 err      
Provisions for quality actions in Connected Care err   err    
Remaining items  2 11 (12) (1) 3
Adding back impairment of fixed assets included in Restructuring and acquisition-related charges and Other items (47) (4) (14) 0 (30)
Adjusted EBITDA 2,845 1,239 623 698 284
           
Q4 2022          
Net income (105)        
Discontinued operations, net of income taxes (8)        
Income tax benefit 120        
Investments in associates, net of income taxes 86        
Financial expenses 76        
Financial income 2        
Income from operations 171 186 (97) 173 (91)
Depreciation, amortization and impairments of fixed assets 381 107 122 32 119
Restructuring and acquisition-related charges 117 18 49 10 39
Other items: 233 60 158   22
Respironics field-action provision 85   85    
Respironics field-action running remediation costs 63   63    
Provisions for quality actions in Connected Care (7)   (7)    
Loss on divestment of business err       err
Remaining items 26 - 10   22
Adding back impairment of fixed assets included in Restructuring and acquisition-related charges and Other items (37) 1 (13) - (24)
Adjusted EBITDA 891 373 245 208 64
           
January to December 2022          
Net income (1,605)        
Discontinued operations, net of income taxes (13)        
Income tax benefit (113)        
Investments in associates, net of income taxes 2        
Financial expenses 258        
Financial income (58)        
Income from operations (1,529) 538 (2,347) 515 (235)
Depreciation, amortization and impairments of fixed assets 1,602 417 646 132 407
Impairment of goodwill 1,357 - 1,357    
Restructuring and acquisition-related charges 202 3 125 11 62
Other items: 925 133 750 (4) 46
Respironics field-action provision 250 err 250   err
Respironics field-action running remediation costs 210   210    
Provisions for quality actions in Connected Care 59   59    
Loss on divestment of business err       err
Remaining items 63 0 24 (6) 46
Adding back impairment of fixed assets included in Restructuring and acquisition-related charges and Other items (252) (83) (136)   (30)
Adjusted EBITDA 2,305 1,008 394 652 250

Composition of free cash flow

in millions of EUR

  Q4 January to December
  2022 2023 2022 2023
Net cash provided by operating activities 540 1,310 (173) 2,136
Net capital expenditures (237) (182) (788) (554)
Purchase of intangible assets (26) (20) (105) (96)
Expenditures on development assets (57) (50) (257) (203)
Capital expenditures on property, plant and equipment (164) (105) (444) (345)
Proceeds from disposals of property, plant and equipment 10 (7) 18 90
Free cash flow 303 1,128 (961) 1,582

FY and Q4 Group performance highlights

in millions of EUR unless otherwise stated

  FY 2023 Q4 2023
Sales - as reported 18,169 5,062
Comparable sales growth - excluding sales provisions1) 7% 3%
Comparable sales growth - as reported 6% (1)%
Adjusted EBITA margin - excluding sales provisions 1) 10.5% 12.5%
Adjusted EBITA margin - as reported 10.6% 12.9%
Order intake growth mid-single-digit decline low-single-digit decline
Operating cash flow 2,175 1,349
1) Excluding provisions charged to sales of EUR 174 million in Q4 2023 mainly in connection with the Respironics consent decree.

Philips statistics

in millions of EUR unless otherwise stated

  2022 2023
  Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Sales 3,918 4,177 4,310 5,422 4,167 4,470 4,471 5,062
Nominal sales growth 2% (1)% 4% 10% 6% 7% 4% (7)%
Comparable sales growth1) (4)% (7)% (5)% 3% 6% 9% 11% (1)%
Comparable order intake2) 5% 1% (6)% (8)% 0% (8)% (9)% (3)%
Gross margin 1,511 1,731 1,730 2,221 1,755 1,961 1,933 1,798
as a % of sales 38.6% 41.4% 3 ) 40.1% 41.0% 42.1% 43.9% 43.2% 35.5%
Selling expenses (1,066) (1,115) (1,157) (1,283) (1,079) (1,112) (1,114) (1,220)
as a % of sales (27.2)% (26.7)% (26.8)% (23.7)% (25.9)% (24.9)% (24.9)% (24.1)%
G&A expenses (155) (146) (175) (195) (158) (157) (150) (143)
as a % of sales (4.0)% (3.5)% (4.1)% (3.6)% (3.8)% (3.5)% (3.4)% (2.8)%
R&D expenses (493) (486) (612) (501) (528) (468) (445) (449)
as a % of sales (12.6)% (11.6)% (14.2)% (9.2)% (12.7)% (10.5)% (10.0)% (8.9)%
Income from operations (181) 11 (1,529) 171 (583) 221 224 24
as a % of sales (4.6)% 0.3% (35.5)% 3.2% (14.0)% 4.9% 5.0% 0.5%
Net income (151) (20) (1,329) (105) (665) 74 90 38
Income from continuing operations attributable to shareholders4) per common share in EUR - diluted (0.17) (0.03) (1.44) (0.12) (0.72) 0.08 0.10 0.04
Adjusted income from continuing operations attributable to shareholders4) per common share in EUR - diluted1) 0.15 0.14 0.24 0.39 0.21 0.28 0.33 0.41
EBITA1) (107) 92 (94) 301 (510) 292 295 3 ) 106
as a % of sales (2.7)% 2.2% (2.2)% 5.6% (12.2)% 6.5% 6.6% 2.1%
Adjusted EBITA1) 243 216 209 651 358 3 ) 453 457 3 ) 653
as a % of sales 6.2% 5.2% 4.8% 12.0% 8.6% 10.1% 10.2% 12.9%
Adjusted EBITDA1) 488 461 466 891 575 681 693 3 ) 896
as a % of sales 12.5% 3 ) 11.0% 10.8% 16.4% 13.8% 15.2% 15.5% 17.7%
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information. 2) Comparable order intake is presented when discussing the Philips Group’s performance. For the definition of this measure, refer to chapter 12.4, Other Key Performance Indicators, of the Annual Report 2022. 3) Contain rounding difference. 4) Shareholders refers to shareholders of Koninklijke Philips N.V. Per share and weighted average share calculations have been adjusted retrospectively for all periods presented to reflect the issuance of shares for the share dividend in respect of 2022.

Philips statistics in millions of EUR unless otherwise stated

  2022 2023
  January-March January-June January-September January-December January-March January-June January-September January-December
Sales 3,918 8,095 12,405 17,827 4,167 8,636 13,107 18,169
Nominal sales growth 2% 0% 2% 4% 6% 7% 6% 2%
Comparable sales growth1) (4)% (5)% (5)% (3)% 6% 8% 9% 6%
Comparable order intake 2) 5% 3% (1)% (3)% 0% (4)% (6)% (5)%
Gross margin 1,511 3,243 4,973 7,194 1,755 3,717 5,650 7,448
as a % of sales 38.6% 40.1% 40.1% 40.4% 42.1% 43.0% 43.1% 41.0%
Selling expenses (1,066) (2,181) (3,338) (4,621) (1,079) (2,191) (3,304) (4,524)
as a % of sales (27.2)% (26.9)% (26.9)% (25.9)% (25.9)% (25.4)% (25.2)% (24.9)%
G&A expenses (155) (301) (476) (671) (158) (315) (465) (608)
as a % of sales (4.0)% (3.7)% (3.8)% (3.8)% (3.8)% (3.6)% (3.5)% (3.3)%
R&D expenses (493) (979) (1,590) (2,091) (528) (996) (1,441) (1,890)
as a % of sales (12.6)% (12.1)% (12.8)% (11.7)% (12.7)% (11.5)% (11.0)% (10.4)%
Income from operations (181) (170) (1,700) (1,529) (583) (362) (139) (115)
as a % of sales (4.6)% (2.1)% (13.7)% (8.6)% (14.0)% (4.2)% (1.1)% (0.6)%
Net income (151) (171) (1,500) (1,605) (665) (591) (501) (463)
Income from continuing operations attributable to shareholders3) per common share in EUR - diluted (0.17) (0.19) (1.64) (1.76) (0.72) (0.64) (0.54) (0.50)
Adjusted income from continuing operations attributable to shareholders3) per common share in EUR - diluted1) 0.15 0.29 0.53 0.92 0.21 0.50 0.83 1.25
EBITA1) (107) (15) (109) 192 (510) (218) 4 ) 77 183
as a % of sales (2.7)% (0.2)% (0.9)% 1.1% (12.2)% (2.5)% 0.6% 1.0%
Adjusted EBITA1) 243 459 667 1,318 358 4 ) 811 4 ) 1,268 1,921
as a % of sales 6.2% 5.7% 5.4% 7.4% 8.6% 9.4% 9.7% 10.6%
Adjusted EBITDA1) 488 948 1,414 2,305 575 1,256 1,949 2,845
as a % of sales 12.5% 4 ) 11.7% 11.4% 12.9% 13.8% 14.5% 14.9% 15.7%
Number of common shares outstanding (after deduction of treasury shares) at the end of period (in thousands) 869,298 885,316 885,348 881,481 881,539 920,085 915,987 906,403
Shareholders' equity per common share in EUR 16.64 16.63 16.31 15.03 13.99 13.18 13.84 13.27
Net debt : group equity ratio1) 28:72 31:69 34:66 35:65 36:64 37:63 36:64 33:67
Total employees at end of period 78,548 78,831 79,097 77,233 73,712 71,519 70,741 69,656
1) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information. 2) Comparable order intake is presented when discussing the Philips Group’s performance. For the definition of this measure, refer to chapter 12.4, Other Key Performance Indicators, of the Annual Report 2022. 3) Shareholders refers to shareholders of Koninklijke Philips N.V. Per share and weighted average share calculations have been adjusted retrospectively for all periods presented to reflect the issuance of shares for the share dividend in respect of 2022. 4) Contain rounding difference.

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