Speaker 1: Phillip's annual order intake has increased for the first time
Speaker 1: in three years. Yes, we're focused now on the earning story.
Speaker 1: That's as the Dutch medical equipment maker mostly resolved issues
Speaker 1: related to its faulty sleep apnea machines, robust demand in
Speaker 1: markets including North America offsetting persistent headwinds in China. Very
Speaker 1: pleased to say join me now is the Phillips CEO
Speaker 1: Roy Jakobs. Roy, good morning, thank you for joining us
Speaker 1: on a busy day for you and the team. So
Speaker 1: comparable order intake growing one percent last year, that is
Speaker 1: the first annual growth since twenty twenty one. What percentage
Speaker 1: growth are you targeting for this year?
Speaker 2: So we were indeed very happy to see us returning
Speaker 2: to polsive orientic growth which as you called our was
Speaker 2: Wiislow China and a strong order intake of four percent in.
Speaker 3: The rest of the world.
Speaker 2: Now we have for this year an order positive arientic
Speaker 2: year ahead of us, so that's what we are targeting.
Speaker 2: Were also seeing the momentum continuing in the rest of world.
Speaker 2: We see still will China continue to be slow, but
Speaker 2: China frost is one story, so when it will be
Speaker 2: back there will be growth and there will be marching
Speaker 2: because it's an attractive market on the long term needs
Speaker 2: healthcare and also consumers will come back, but that's currently
Speaker 2: still not exactly clear when that's when that will happen.
Speaker 2: But we are dialing down on delivering the innovations across
Speaker 2: the world, and there we have seen good markets like
Speaker 2: North America.
Speaker 3: We were a close to double digit in the in
Speaker 3: the year.
Speaker 2: So you see that there's really a two speed world
Speaker 2: currently that we are tracking on.
Speaker 1: Okay, two speed growth. Let me push you roy on
Speaker 1: the order intake outlook for the rest of the year.
Speaker 1: You see that growing. What are we are we talking
Speaker 1: one percent two percent? You achieved that in the fourth quarter.
Speaker 1: How many percentages of order intake growth can you expect
Speaker 1: in twenty twenty five.
Speaker 2: So we have not given an exact number. We say
Speaker 2: we will continue with positive order intake growth. We also
Speaker 2: expect it will be a similar combination of still a
Speaker 2: slower China and.
Speaker 3: Positive growth outside of the world.
Speaker 2: But we have ladded deer for now based on that,
Speaker 2: we also will deliver growth in sales and that then
Speaker 2: also helps us to expand further our margin by a
Speaker 2: not a thirty to eighty BIPs and deliver song cash,
Speaker 2: which also actually based on our casualization in twenty twenty four,
Speaker 2: has given us the ability now to get back into
Speaker 2: dividend and offer diffidant in cash to our shoholders.
Speaker 1: Let me get to the tail of two markets, then
Speaker 1: double digit decline in China. To be clear, right, you
Speaker 1: do not see the Chinese market turning around for Phillips
Speaker 1: in twenty twenty five. This is not a twenty twenty
Speaker 1: five story.
Speaker 2: So what we said is that for sure, for the
Speaker 2: first half, we see the momentum continuing that we had
Speaker 2: in the second part of twenty twenty four, and that
Speaker 2: was indeed slow consumer demand and we saw still slow
Speaker 2: procurement in the healthcare site. Now we also know that
Speaker 2: China is working its way back into economic growth as
Speaker 2: well as we know that they're working through the reforms
Speaker 2: in healthcare. So we expect it will come back. We
Speaker 2: just don't know exactly when it's going to happen. So
Speaker 2: therefore we are not going or running ahead of that timing,
Speaker 2: but it will come back at a certain point in time.
Speaker 3: Now.
Speaker 2: In the meanwhile, we are dialing up the engine and
Speaker 2: indeed deliver the innovations to the rest.
Speaker 3: Of the world.
Speaker 2: As I mentioned, we're next to North America. Also there
Speaker 2: are good growth engines in Saudi and Indonesia. We also
Speaker 2: see pocuts of Europe where actually growth is coming back.
Speaker 2: So there are other areas we will go after the growth.
Speaker 2: And we have been really strengthening our fundamentals. So we've
Speaker 2: been launching exciting innovation AI fueled that will help us
Speaker 2: to deliver the growth and also deliver in China local
Speaker 2: for local products when the demand turns back.
Speaker 1: How big is the China market for Phillips now.
Speaker 2: Around ten percent of our total revenue, so it's still
Speaker 2: sizable and we also expect that to continue. But we
Speaker 2: have also the other ninety percent to play for, and
Speaker 2: that's a great combination of different markets. Latin America, for example,
Speaker 2: was a great positive story last year. They had a
Speaker 2: few challenging years before that they came back strongly. So
Speaker 2: we see the capex environments in general strengthening across the world.
Speaker 2: We saw that in the US where they came out
Speaker 2: of a negative twenty two for the hospitals twenty three
Speaker 2: was already stronger, and now in twenty four we saw
Speaker 2: that really picking up and therefore they're investing more because
Speaker 2: the cues.
Speaker 3: In healthcare are still big.
Speaker 2: The need for healthcare is growing, and therefore we also
Speaker 2: expect that demand for our innovations that are really relevant
Speaker 2: for them will continue to be there.
Speaker 1: So what assumptions roy are you making about the tariff
Speaker 1: impact when it comes to your outlook, particularly with that
Speaker 1: focus on the key North American market.
Speaker 3: So we have.
Speaker 2: Included the terriffs that currently are known and put into force,
Speaker 2: and those are the terrors between US and China, So
Speaker 2: those we have been catering for. We also, as part
Speaker 2: of the plan, have been really working through the last
Speaker 2: three years to really strengthen our supply chain, further regionalize it,
Speaker 2: making it more robust, also adapted. We don't speculate of
Speaker 2: the rest of terrors, but what we do advocate for
Speaker 2: is that patients are really taken central when we talk
Speaker 2: about terras because it has an impact on supply chain
Speaker 2: and we have still a short lived memory from the
Speaker 2: COVID crisis where with the breakd and of supply chains,
Speaker 2: we had massive shortages in providing care to our patients.
Speaker 2: So patients first when we think about terrors, but at
Speaker 2: the same time we take also that's in our own
Speaker 2: hands by really working the supply chain and going into more.
Speaker 3: Local for local delivery, because that is the trend.
Speaker 2: Healthcare is global, but delivery needs to be more localized
Speaker 2: than we're working that.
Speaker 1: Does it mean you may have to put up prices
Speaker 1: or do you absorb the cost and you absorb the
Speaker 1: squeeze on the margin.
Speaker 2: So this point in time, we are working very strongly
Speaker 2: on productivity. So for example, we have been delivering one
Speaker 2: point seven billion of productivity in the plant to date.
Speaker 2: We're expanding that for next year to two point five
Speaker 2: billion productivity, so that actually we can deal with costs
Speaker 2: and continue to invest behind the innovation. So we spend
Speaker 2: one point seven billion of innovation whilst we at the
Speaker 2: same time also saved one point seven billion of productivity
Speaker 2: in the same period.
Speaker 3: So actually that is.
Speaker 2: The way how we continue to innovate and deliver exciting innovation,
Speaker 2: especially now also where AI is really an important new
Speaker 2: technology to deliver a great value, like for example, some
Speaker 2: of the launches that we had that are fueled by AI.
Speaker 2: That's the way how you can deal with terriers and
Speaker 2: or cost increases.
Speaker 1: Roy are you really looking at the portfolio of businesses
Speaker 1: right now. In January, you saw you've agreed to sell
Speaker 1: the emergency care unit to bridge Field Capital. Are you
Speaker 1: looking at further divestments?
Speaker 2: So we continue to look at how we move Phillips
Speaker 2: forward and in that we actually scale the innovations that
Speaker 2: we believe are the ones that have the best potential
Speaker 2: for the future. That emergency care business was a smaller business,
Speaker 2: so didn't have that big skill potential. The portfolio that
Speaker 2: we have with imaging, monitoring, interventional and personal health, we
Speaker 2: believe are force very strong pillars and then actually all supported.
Speaker 2: We had a very strong informatics layer. So those are
Speaker 2: exciting portfolio blocks. They're all delivering value to many customers
Speaker 2: in the world. We have leading positions in that. We
Speaker 2: also keep innovating in each of those pillars, and those
Speaker 2: are the ones we also take into the future.
Speaker 1: All right, before we let you go, are you ready
Speaker 1: to re enter the US market when it comes to
Speaker 1: those sleep apnea devices? Where is that? DOJ investigation? Right now?
Speaker 3: So on sleep and respiratory care.
Speaker 2: Actually, we had a great year in twenteen twenty four
Speaker 2: outside of the US. We could we turn back into
Speaker 2: the markets and we saw that we re resulting in
Speaker 2: growth in sleep and respiratory care and also we had
Speaker 2: strong profit delivery in sleep and respiratory care, which was
Speaker 2: the first year.
Speaker 3: Indeed, after the we call, we closed the litigation.
Speaker 2: As you know, DOJ investigation is still going on, but
Speaker 2: we are actually excited about some of the new innovations
Speaker 2: and we just got two new approvals and two new
Speaker 2: masks that we're bringing into the market. So actually as
Speaker 2: our see is coming back as an engine and we
Speaker 2: are working behind that. Tips.
Speaker 1: Yeah, ro Jakobs, thank you. On the back of those earnings,
Speaker 1: Audit intake for Phillips comparable audit intake growing for one
Speaker 1: percent last year for the first time since twenty twenty one.