1 00:00:00,120 --> 00:00:03,560 Speaker 1: Phillip's annual order intake has increased for the first time 2 00:00:03,640 --> 00:00:05,880 Speaker 1: in three years. Yes, we're focused now on the earning story. 3 00:00:05,960 --> 00:00:09,039 Speaker 1: That's as the Dutch medical equipment maker mostly resolved issues 4 00:00:09,080 --> 00:00:13,160 Speaker 1: related to its faulty sleep apnea machines, robust demand in 5 00:00:13,320 --> 00:00:19,560 Speaker 1: markets including North America offsetting persistent headwinds in China. Very 6 00:00:19,560 --> 00:00:21,319 Speaker 1: pleased to say join me now is the Phillips CEO 7 00:00:21,560 --> 00:00:25,080 Speaker 1: Roy Jakobs. Roy, good morning, thank you for joining us 8 00:00:25,079 --> 00:00:26,279 Speaker 1: on a busy day for you and the team. So 9 00:00:26,320 --> 00:00:29,880 Speaker 1: comparable order intake growing one percent last year, that is 10 00:00:29,880 --> 00:00:32,920 Speaker 1: the first annual growth since twenty twenty one. What percentage 11 00:00:32,960 --> 00:00:35,920 Speaker 1: growth are you targeting for this year? 12 00:00:37,240 --> 00:00:39,680 Speaker 2: So we were indeed very happy to see us returning 13 00:00:39,680 --> 00:00:42,440 Speaker 2: to polsive orientic growth which as you called our was 14 00:00:42,600 --> 00:00:47,120 Speaker 2: Wiislow China and a strong order intake of four percent in. 15 00:00:47,080 --> 00:00:47,840 Speaker 3: The rest of the world. 16 00:00:48,280 --> 00:00:51,919 Speaker 2: Now we have for this year an order positive arientic 17 00:00:52,000 --> 00:00:54,960 Speaker 2: year ahead of us, so that's what we are targeting. 18 00:00:55,680 --> 00:00:58,960 Speaker 2: Were also seeing the momentum continuing in the rest of world. 19 00:00:59,320 --> 00:01:03,440 Speaker 2: We see still will China continue to be slow, but 20 00:01:03,560 --> 00:01:06,039 Speaker 2: China frost is one story, so when it will be 21 00:01:06,240 --> 00:01:08,840 Speaker 2: back there will be growth and there will be marching 22 00:01:08,880 --> 00:01:11,959 Speaker 2: because it's an attractive market on the long term needs 23 00:01:12,000 --> 00:01:15,520 Speaker 2: healthcare and also consumers will come back, but that's currently 24 00:01:15,560 --> 00:01:18,560 Speaker 2: still not exactly clear when that's when that will happen. 25 00:01:18,720 --> 00:01:21,839 Speaker 2: But we are dialing down on delivering the innovations across 26 00:01:21,840 --> 00:01:24,680 Speaker 2: the world, and there we have seen good markets like 27 00:01:24,760 --> 00:01:25,440 Speaker 2: North America. 28 00:01:25,680 --> 00:01:28,480 Speaker 3: We were a close to double digit in the in 29 00:01:28,520 --> 00:01:28,840 Speaker 3: the year. 30 00:01:28,959 --> 00:01:31,280 Speaker 2: So you see that there's really a two speed world 31 00:01:31,319 --> 00:01:33,360 Speaker 2: currently that we are tracking on. 32 00:01:33,959 --> 00:01:35,880 Speaker 1: Okay, two speed growth. Let me push you roy on 33 00:01:36,160 --> 00:01:38,600 Speaker 1: the order intake outlook for the rest of the year. 34 00:01:38,640 --> 00:01:40,280 Speaker 1: You see that growing. What are we are we talking 35 00:01:40,319 --> 00:01:42,480 Speaker 1: one percent two percent? You achieved that in the fourth quarter. 36 00:01:42,840 --> 00:01:45,000 Speaker 1: How many percentages of order intake growth can you expect 37 00:01:45,040 --> 00:01:45,880 Speaker 1: in twenty twenty five. 38 00:01:46,800 --> 00:01:49,360 Speaker 2: So we have not given an exact number. We say 39 00:01:49,360 --> 00:01:51,920 Speaker 2: we will continue with positive order intake growth. We also 40 00:01:51,960 --> 00:01:54,560 Speaker 2: expect it will be a similar combination of still a 41 00:01:54,600 --> 00:01:56,680 Speaker 2: slower China and. 42 00:01:57,120 --> 00:01:59,200 Speaker 3: Positive growth outside of the world. 43 00:02:00,200 --> 00:02:03,200 Speaker 2: But we have ladded deer for now based on that, 44 00:02:03,200 --> 00:02:06,600 Speaker 2: we also will deliver growth in sales and that then 45 00:02:06,680 --> 00:02:09,720 Speaker 2: also helps us to expand further our margin by a 46 00:02:09,800 --> 00:02:12,959 Speaker 2: not a thirty to eighty BIPs and deliver song cash, 47 00:02:13,040 --> 00:02:16,320 Speaker 2: which also actually based on our casualization in twenty twenty four, 48 00:02:16,760 --> 00:02:18,960 Speaker 2: has given us the ability now to get back into 49 00:02:19,040 --> 00:02:23,160 Speaker 2: dividend and offer diffidant in cash to our shoholders. 50 00:02:23,600 --> 00:02:25,160 Speaker 1: Let me get to the tail of two markets, then 51 00:02:25,200 --> 00:02:28,680 Speaker 1: double digit decline in China. To be clear, right, you 52 00:02:28,720 --> 00:02:31,200 Speaker 1: do not see the Chinese market turning around for Phillips 53 00:02:31,360 --> 00:02:33,400 Speaker 1: in twenty twenty five. This is not a twenty twenty 54 00:02:33,400 --> 00:02:34,040 Speaker 1: five story. 55 00:02:35,240 --> 00:02:37,440 Speaker 2: So what we said is that for sure, for the 56 00:02:37,520 --> 00:02:40,600 Speaker 2: first half, we see the momentum continuing that we had 57 00:02:40,639 --> 00:02:43,560 Speaker 2: in the second part of twenty twenty four, and that 58 00:02:43,760 --> 00:02:47,400 Speaker 2: was indeed slow consumer demand and we saw still slow 59 00:02:47,440 --> 00:02:50,640 Speaker 2: procurement in the healthcare site. Now we also know that 60 00:02:50,760 --> 00:02:54,520 Speaker 2: China is working its way back into economic growth as 61 00:02:54,600 --> 00:02:57,200 Speaker 2: well as we know that they're working through the reforms 62 00:02:57,240 --> 00:03:00,080 Speaker 2: in healthcare. So we expect it will come back. We 63 00:03:00,200 --> 00:03:02,360 Speaker 2: just don't know exactly when it's going to happen. So 64 00:03:02,400 --> 00:03:06,400 Speaker 2: therefore we are not going or running ahead of that timing, 65 00:03:06,800 --> 00:03:09,040 Speaker 2: but it will come back at a certain point in time. 66 00:03:09,200 --> 00:03:09,359 Speaker 3: Now. 67 00:03:09,440 --> 00:03:11,960 Speaker 2: In the meanwhile, we are dialing up the engine and 68 00:03:12,040 --> 00:03:14,040 Speaker 2: indeed deliver the innovations to the rest. 69 00:03:13,880 --> 00:03:14,280 Speaker 3: Of the world. 70 00:03:14,280 --> 00:03:16,360 Speaker 2: As I mentioned, we're next to North America. Also there 71 00:03:16,360 --> 00:03:20,040 Speaker 2: are good growth engines in Saudi and Indonesia. We also 72 00:03:20,080 --> 00:03:22,600 Speaker 2: see pocuts of Europe where actually growth is coming back. 73 00:03:22,800 --> 00:03:25,640 Speaker 2: So there are other areas we will go after the growth. 74 00:03:25,919 --> 00:03:28,320 Speaker 2: And we have been really strengthening our fundamentals. So we've 75 00:03:28,320 --> 00:03:31,920 Speaker 2: been launching exciting innovation AI fueled that will help us 76 00:03:32,000 --> 00:03:35,200 Speaker 2: to deliver the growth and also deliver in China local 77 00:03:35,240 --> 00:03:38,560 Speaker 2: for local products when the demand turns back. 78 00:03:39,160 --> 00:03:41,320 Speaker 1: How big is the China market for Phillips now. 79 00:03:41,640 --> 00:03:44,520 Speaker 2: Around ten percent of our total revenue, so it's still 80 00:03:44,640 --> 00:03:49,080 Speaker 2: sizable and we also expect that to continue. But we 81 00:03:49,160 --> 00:03:51,600 Speaker 2: have also the other ninety percent to play for, and 82 00:03:51,640 --> 00:03:55,240 Speaker 2: that's a great combination of different markets. Latin America, for example, 83 00:03:55,320 --> 00:03:58,160 Speaker 2: was a great positive story last year. They had a 84 00:03:58,200 --> 00:04:03,240 Speaker 2: few challenging years before that they came back strongly. So 85 00:04:03,240 --> 00:04:07,880 Speaker 2: we see the capex environments in general strengthening across the world. 86 00:04:08,120 --> 00:04:09,760 Speaker 2: We saw that in the US where they came out 87 00:04:09,760 --> 00:04:12,600 Speaker 2: of a negative twenty two for the hospitals twenty three 88 00:04:12,800 --> 00:04:15,040 Speaker 2: was already stronger, and now in twenty four we saw 89 00:04:15,120 --> 00:04:18,440 Speaker 2: that really picking up and therefore they're investing more because 90 00:04:18,480 --> 00:04:19,160 Speaker 2: the cues. 91 00:04:18,880 --> 00:04:19,960 Speaker 3: In healthcare are still big. 92 00:04:20,360 --> 00:04:22,920 Speaker 2: The need for healthcare is growing, and therefore we also 93 00:04:22,960 --> 00:04:26,440 Speaker 2: expect that demand for our innovations that are really relevant 94 00:04:26,440 --> 00:04:27,880 Speaker 2: for them will continue to be there. 95 00:04:28,240 --> 00:04:31,400 Speaker 1: So what assumptions roy are you making about the tariff 96 00:04:31,560 --> 00:04:34,719 Speaker 1: impact when it comes to your outlook, particularly with that 97 00:04:34,800 --> 00:04:36,560 Speaker 1: focus on the key North American market. 98 00:04:37,720 --> 00:04:38,200 Speaker 3: So we have. 99 00:04:38,200 --> 00:04:42,159 Speaker 2: Included the terriffs that currently are known and put into force, 100 00:04:42,240 --> 00:04:45,200 Speaker 2: and those are the terrors between US and China, So 101 00:04:45,240 --> 00:04:47,600 Speaker 2: those we have been catering for. We also, as part 102 00:04:47,640 --> 00:04:49,880 Speaker 2: of the plan, have been really working through the last 103 00:04:50,160 --> 00:04:54,760 Speaker 2: three years to really strengthen our supply chain, further regionalize it, 104 00:04:54,960 --> 00:04:59,440 Speaker 2: making it more robust, also adapted. We don't speculate of 105 00:04:59,520 --> 00:05:01,960 Speaker 2: the rest of terrors, but what we do advocate for 106 00:05:02,200 --> 00:05:04,800 Speaker 2: is that patients are really taken central when we talk 107 00:05:04,800 --> 00:05:07,360 Speaker 2: about terras because it has an impact on supply chain 108 00:05:07,720 --> 00:05:11,800 Speaker 2: and we have still a short lived memory from the 109 00:05:11,839 --> 00:05:14,480 Speaker 2: COVID crisis where with the breakd and of supply chains, 110 00:05:14,600 --> 00:05:18,240 Speaker 2: we had massive shortages in providing care to our patients. 111 00:05:18,279 --> 00:05:21,040 Speaker 2: So patients first when we think about terrors, but at 112 00:05:21,040 --> 00:05:24,039 Speaker 2: the same time we take also that's in our own 113 00:05:24,080 --> 00:05:27,200 Speaker 2: hands by really working the supply chain and going into more. 114 00:05:27,080 --> 00:05:29,919 Speaker 3: Local for local delivery, because that is the trend. 115 00:05:30,000 --> 00:05:32,760 Speaker 2: Healthcare is global, but delivery needs to be more localized 116 00:05:32,800 --> 00:05:33,479 Speaker 2: than we're working that. 117 00:05:34,120 --> 00:05:35,719 Speaker 1: Does it mean you may have to put up prices 118 00:05:35,839 --> 00:05:37,280 Speaker 1: or do you absorb the cost and you absorb the 119 00:05:37,279 --> 00:05:38,120 Speaker 1: squeeze on the margin. 120 00:05:39,920 --> 00:05:41,839 Speaker 2: So this point in time, we are working very strongly 121 00:05:41,880 --> 00:05:45,520 Speaker 2: on productivity. So for example, we have been delivering one 122 00:05:45,560 --> 00:05:47,839 Speaker 2: point seven billion of productivity in the plant to date. 123 00:05:47,880 --> 00:05:50,400 Speaker 2: We're expanding that for next year to two point five 124 00:05:50,440 --> 00:05:53,800 Speaker 2: billion productivity, so that actually we can deal with costs 125 00:05:54,200 --> 00:05:56,960 Speaker 2: and continue to invest behind the innovation. So we spend 126 00:05:57,000 --> 00:05:59,520 Speaker 2: one point seven billion of innovation whilst we at the 127 00:05:59,520 --> 00:06:03,200 Speaker 2: same time also saved one point seven billion of productivity 128 00:06:03,200 --> 00:06:04,040 Speaker 2: in the same period. 129 00:06:04,400 --> 00:06:05,280 Speaker 3: So actually that is. 130 00:06:05,200 --> 00:06:08,599 Speaker 2: The way how we continue to innovate and deliver exciting innovation, 131 00:06:08,720 --> 00:06:12,200 Speaker 2: especially now also where AI is really an important new 132 00:06:12,560 --> 00:06:15,360 Speaker 2: technology to deliver a great value, like for example, some 133 00:06:15,400 --> 00:06:18,080 Speaker 2: of the launches that we had that are fueled by AI. 134 00:06:18,480 --> 00:06:20,279 Speaker 2: That's the way how you can deal with terriers and 135 00:06:20,400 --> 00:06:22,720 Speaker 2: or cost increases. 136 00:06:23,279 --> 00:06:25,799 Speaker 1: Roy are you really looking at the portfolio of businesses 137 00:06:26,320 --> 00:06:28,360 Speaker 1: right now. In January, you saw you've agreed to sell 138 00:06:28,400 --> 00:06:31,279 Speaker 1: the emergency care unit to bridge Field Capital. Are you 139 00:06:31,360 --> 00:06:34,520 Speaker 1: looking at further divestments? 140 00:06:35,080 --> 00:06:39,159 Speaker 2: So we continue to look at how we move Phillips 141 00:06:39,200 --> 00:06:42,440 Speaker 2: forward and in that we actually scale the innovations that 142 00:06:42,480 --> 00:06:45,400 Speaker 2: we believe are the ones that have the best potential 143 00:06:45,440 --> 00:06:48,440 Speaker 2: for the future. That emergency care business was a smaller business, 144 00:06:48,440 --> 00:06:51,640 Speaker 2: so didn't have that big skill potential. The portfolio that 145 00:06:51,640 --> 00:06:55,880 Speaker 2: we have with imaging, monitoring, interventional and personal health, we 146 00:06:55,960 --> 00:06:59,960 Speaker 2: believe are force very strong pillars and then actually all supported. 147 00:07:00,320 --> 00:07:02,560 Speaker 2: We had a very strong informatics layer. So those are 148 00:07:03,360 --> 00:07:07,839 Speaker 2: exciting portfolio blocks. They're all delivering value to many customers 149 00:07:07,880 --> 00:07:10,400 Speaker 2: in the world. We have leading positions in that. We 150 00:07:10,440 --> 00:07:14,200 Speaker 2: also keep innovating in each of those pillars, and those 151 00:07:14,240 --> 00:07:15,840 Speaker 2: are the ones we also take into the future. 152 00:07:16,400 --> 00:07:17,920 Speaker 1: All right, before we let you go, are you ready 153 00:07:17,960 --> 00:07:19,560 Speaker 1: to re enter the US market when it comes to 154 00:07:19,560 --> 00:07:23,040 Speaker 1: those sleep apnea devices? Where is that? DOJ investigation? Right now? 155 00:07:23,680 --> 00:07:25,520 Speaker 3: So on sleep and respiratory care. 156 00:07:25,560 --> 00:07:27,600 Speaker 2: Actually, we had a great year in twenteen twenty four 157 00:07:28,240 --> 00:07:30,400 Speaker 2: outside of the US. We could we turn back into 158 00:07:30,440 --> 00:07:33,240 Speaker 2: the markets and we saw that we re resulting in 159 00:07:33,520 --> 00:07:36,400 Speaker 2: growth in sleep and respiratory care and also we had 160 00:07:36,480 --> 00:07:39,800 Speaker 2: strong profit delivery in sleep and respiratory care, which was 161 00:07:39,840 --> 00:07:40,360 Speaker 2: the first year. 162 00:07:40,400 --> 00:07:43,640 Speaker 3: Indeed, after the we call, we closed the litigation. 163 00:07:43,760 --> 00:07:46,760 Speaker 2: As you know, DOJ investigation is still going on, but 164 00:07:46,840 --> 00:07:49,040 Speaker 2: we are actually excited about some of the new innovations 165 00:07:49,040 --> 00:07:51,000 Speaker 2: and we just got two new approvals and two new 166 00:07:51,040 --> 00:07:54,040 Speaker 2: masks that we're bringing into the market. So actually as 167 00:07:54,080 --> 00:07:56,360 Speaker 2: our see is coming back as an engine and we 168 00:07:56,440 --> 00:07:58,200 Speaker 2: are working behind that. Tips. 169 00:07:58,360 --> 00:08:01,240 Speaker 1: Yeah, ro Jakobs, thank you. On the back of those earnings, 170 00:08:01,240 --> 00:08:05,000 Speaker 1: Audit intake for Phillips comparable audit intake growing for one 171 00:08:05,000 --> 00:08:08,960 Speaker 1: percent last year for the first time since twenty twenty one.