Company reaffirms targets of 4-6% comparable sales growth and an Adjusted EBITA margin improvement of 100 basis points on average annually for the 2017–2020 period [1], and improvement of organic Return on Invested Capital (ROIC) to mid-to-high teens in 2020;
•Philips expects to increase the annual free cash flow to above EUR 1.5 billion in 2020 [2]

Amsterdam, the Netherlands – At a meeting with investors and financial analysts today in Amsterdam, Royal Philips (NYSE: PHG, AEX: PHIA) CEO Frans van Houten, together with CFO Abhijit Bhattacharya and several executives, will provide an update on the company’s performance and value creation journey.

“We are excited about the strong demand for our health technology innovations, and we will continue to drive our value creation journey, delivering mid-single-digit comparable sales growth and an annual improvement of the Adjusted EBITA margin of around 100 basis points,” said Frans van Houten. “To expand our market positions, increase margins and fully unlock Philips’ potential, we will further improve customer and operational excellence, boost growth in our core businesses through geographical expansion and consultative customer partnerships, and innovate with integrated solutions to improve people’s health and enhance the productivity of care providers.”

Innovation is core to Philips’ value creation, as exemplified by the company’s deep clinical partnerships and global EUR 1.8 billion R&D program. More than half of Philips’ annual sales is related to new product sales [3], such as Philips’ Azurion next-generation image-guided therapy platform, General Care Solution with Early Warning Scoring to identify subtle signs of deterioration in a general floor patient’s condition, and Dream Family solution for sleep therapy.

Philips reiterates its targets of 4-6% comparable sales growth and an Adjusted EBITA margin improvement of 100 basis points on average per year for the 2017–2020 period [1], and an improvement of the organic Return on Invested Capital (ROIC) to mid-to-high teens in 2020. The company expects to increase the annual free cash flow to above EUR 1.5 billion in 2020 [2]. Philips increased its productivity program from EUR 1.2 billion by 2019, to EUR 1.8 billion by 2020.

Presentations at Philips’ headquarters in Amsterdam will start at 11:30 am CET. Until approximately 15:45 pm CET, the plenary sessions can be followed via a live webcast. A video summary of the subsequent business zooms will be made available soon after the end of the event. Please click on this link to follow the webcast and download the slides that will be used during the day.

[1] Comparable sales exclude the effect of currency movements and acquisitions and divestments (changes in consolidation). Philips believes that comparable sales information enhances understanding of sales performance; Adjusted EBITA is defined as Income from operations (EBIT) excluding amortization of acquired intangible assets, impairment of goodwill and other intangible assets, restructuring charges, acquisition-related costs and other one-time charges and gains.
[2] Free cash flow adjusted for one-time pension contributions and significant litigation
[3] New product sales over three years based on YTD Q3 2018