Philips’ Fourth Quarter and Annual Results 2019

Fourth-quarter highlights

• Sales amounted to EUR 6 billion, with 3% comparable sales growth
• Comparable order intake increased 3%
• Income from continuing operations was EUR 550 million, compared to EUR 723 million in Q4 2018
• Adjusted EBITA margin improved by 50 basis points to 17.9% of sales, compared to 17.4% of sales in Q4 2018
• Income from operations amounted to EUR 730 million, compared to EUR 769 million in Q4 2018
• EPS from continuing operations (diluted) amounted to EUR 0.61; Adjusted EPS from continuing operations (diluted) increased 9% compared to Q4 2018 to EUR 0.83
• Operating cash flow amounted to EUR 1,271 million, compared to EUR 1,293 million in Q4 2018; free cash flow was EUR 959 million, compared to EUR 1,019 million in Q4 2018

 Full-year highlights

• Sales increased to EUR 19.5 billion, with 4% comparable sales growth
• Comparable order intake increased 3%
• Income from continuing operations was EUR 1,192 million, compared to EUR 1,310 million in 2018
• Adjusted EBITA margin increased 10 basis points to 13.2% of sales, compared to 13.1% of sales in 2018
• Income from operations amounted to EUR 1,644 million, compared to EUR 1,719 million in 2018
• EPS from continuing operations (diluted) amounted to EUR 1.30; Adjusted EPS from continuing operations (diluted) increased 15% compared to 2018 to EUR 2.02
• Operating cash flow totaled EUR 2,032 million, compared to EUR 1,780 million in 2018; free cash flow increased to EUR 1,053 million, compared to EUR 984 million in 2018
• Proposed dividend of EUR 0.85 per share

 Company update

• Philips to review ownership options for the Domestic Appliances business
• Roy Jakobs appointed as the new Chief Business Leader of the Connected Care businesses, succeeding Carla Kriwet, who will leave the company

 Frans van Houten, CEO:

 “I am encouraged that the three business segments together delivered 4% comparable sales growth and an Adjusted EBITA margin improvement of 120 basis points in the fourth quarter, despite a more challenging environment. This performance was partly offset by lower IP royalties compared to Q4 2018, resulting in 3% comparable sales growth and an Adjusted EBITA margin improvement of 50 basis points for the Group. Comparable order intake grew a further 3%, on the back of strong 10% growth in Q4 2018.
For the full year, we are pleased to have grown the company to EUR 19.5 billion sales with 4.5% comparable sales growth, achieving a free cash flow of more than EUR 1 billion, and increasing adjusted earnings per share from continuing operations by 15%. Our profitability improvement of 10 basis points for the year fell short of our plan, partly due to headwinds.
Looking ahead at 2020 we continue to see geopolitical and economic risks. We aim for 4-6% comparable sales growth and an Adjusted EBITA margin improvement of around 100 basis points, with a performance momentum that is expected to improve in the course of the year.”