Koninklijke Philips N.V. (PHG) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

April 24, 2023 4:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Leandro Mazzoni

Hi, everyone. Welcome to Philips' First Quarter 2023 Results Webcast. I have here with me our CEO, Roy Jakobs, and our CFO, Abhijit Bhattacharya. The first quarter press release and slide deck as well as the frequently asked questions and deck on the Respironics recall were published on our Investor Relations website this morning. The replay and full transcript of the webcast will be made available on the website as well.

Before we start, I want to draw your attention to our safe harbor statement on screen. You will also find the statement in the presentation published on our Investor Relations website. In today's call, we will discuss our first quarter results as well as the progress on the actions we're taking across different areas to drive performance improvement.

With that, I would like to hand over to Roy.

Roy Jakobs

Thanks, Leandro. Good morning, everyone, and welcome. It's good to be with you again. I want to start with giving you the key highlights for this quarter. First, we delivered a solid start to the year with 6% comparable sales growth and improvements in profitability and operating cash flow in Q1 as our actions to strengthen execution and to deliver shareholder value started to take effect.

Secondly, we are making good progress in executing our plan and on our three priorities: enhancing patient safety and quality, strengthening our supply chain reliability, which has helped our improved performance in Q4 last year and the first quarter this year and established a simplified, more agile operating model.

Thirdly, resolving the Respironics recall for patients remains our highest priority. This quarter, Respironics recorded a €575 million provision in connection with the anticipated resolution of the economic loss class action in the U.S.

Looking ahead, based on our solid performance in the quarter, our order book and the ongoing actions to further improve execution, we are confident in our plan for 2023, acknowledging that uncertainties remain.

Now on to some key financials in the quarter. We had a solid 6% comparable sales growth, with strong growth of 15% in Diagnosis & Treatment and 3% growth in Connected Care, partly offset by a 6% decline in Personal Health. Comparable order intake grew double digit in the Diagnosis & Treatment businesses, offset by Connected Care. Sales in the quarter were supported by the good momentum for diagnosis treatment and Connected Care businesses in China as well.