Koninklijke Philips N.V. (NYSE:PHG) Q3 2024 Results Conference Call October 28, 2024 5:00 AM ET

Company Participants

Leandro Mazzoni - Head of Investor Relations
Roy Jakobs - Chief Executive Officer
Charlotte Hanneman - CFO

Conference Call Participants

Richard Felton - Goldman Sachs
Hassan Al-Wakeel - Barclays
David Adlington - JPMorgan
Lisa Clive - Bernstein
Graham Doyle - UBS
Hugo Solvet - Exane BNP Paribas
Julien Dormois - Jefferies
Robert Davies - Morgan Stanley
Falko Friedrichs - Deutsche Bank
Ed Ridley-Day - Redburn

Leandro Mazzoni

Hi, everyone. Welcome to Philips' Third Quarter 2024 Results Webcast. I'm here with our CEO, Roy Jakobs; and our CFO, Charlotte Hanneman. The press release and investor deck were published on our Investor Relations website this morning. The replay and full transcript of this webcast will be made available on the website after the call 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.

I will now hand it over to Roy.

Roy Jakobs

Thank you, Leandro. Good morning, everyone, and welcome to the call. I want to start with the key highlights of this morning's release. We delivered strong improvement in profitability in the quarter, while sales were flat, and orders slightly decreased as demand from hospitals and consumers in China further deteriorated. We expect impact from China to continue. Therefore, we have lowered our full year sales outlook. At the same time, we expect adjusted EBITDA margin to be at around 11.5%, the upper end of the current outlook range.

Within an ongoing challenging macro environment, we remain focused on successfully executing our 3-year plan to fully capture growth and margin expansion opportunities. With patient safety as our number 1 priority we are committed to delivering better care for more people.

Onto the key financial and performance highlights. Group comparable sales were flat on the back of 11% growth in Q3 2023 and further deteriorated demand in China. On the back of growth last year, we recorded a strong sales and order decline in China, driven by a further decline in consumer and hospital demand. This was beyond our China scenario from July where we assumed stabilization of China, whilst timing of improvement was uncertain.

We continue to deliver solid sales growth outside of China. Orders decreased 2%, also due to the decline in China. In the quarter, diagnosis and treatment orders remained solid outside of China, driven by, in particular, North America. Also, year-to-date, our orders grew 1%, including China, and we still expect order growth in the full year, including China, driven by the strength of the rest of the world, while there is certain uncertainty in China that remains.