Koninklijke Philips (PHG) 26 Jul 212021 Q2 Earnings call transcript

Welcome to the Royal Philips second quarter and semi-annual 2021 results conference call on Monday, July 26, 2021.

During the call hosted by Mr. Frans van Houten, CEO and Mr. Abhijit Bhattacharya, CFO, all participants will be in a listen-only mode. After the introductions, there will be an opportunity to ask questions. Instructions]. [Operator this on recorded of the that will a Royal will available be Investor call note and be replay Philips. Please Relations website now will hand conference to I the Mr. over Investor of Head Mazzoni, Leandro Relations. ahead, go sir. Please

to Good Philips morning and second XXXX call. results quarter conference welcome

CEO, are we will CFO, the Abhijit van Houten you period highlights will for through questions. our and Joining Abhijit our and Frans that Bhattacharya. take me your Frans today financial after and take our strategic and

were A and published morning. will release related of today the website. available CET on slide deck on this made X:XX press this at Our Both our information AM Investor full call available are be the Relations also website. transcript

amortization other in of release, changes. As the and of Comparable assets, defined intangible currency adjusted intangible press adjusted as sales for portfolio assets, items. charges, orders significant goodwill one-off is are and impairment for acquisition-related operations growth costs and mentioned EBITDA acquired restructuring excluding income from and

the projections is results of QX this assets longer Appliances sale. and the in of liabilities and under reported included reported Over business operations Frans. Domestic forward-looking are held Appliances and from you, are Sales operations. XXXX, All and continuing relevant results As exclude assets discontinued the no as Domestic liabilities business. for business to

families Thanks. keeping safe you and I for your thank you Hello and are everyone hope and Yes. joining us that today. well.

resources momentum will details. is do And teams employees, continuity. we this you COVID-XX over the related the of as the quality talk actually the is I performance care, the well-being focused to Sleep call more meeting upfront and company of X% address necessary everything their with out, for health our to our in business. flow June, Respiratory patients safety issue we business want to we component not this first, I for comparable come against to the in resulted in adjusted and actions all have at cash of the impact free strong me in their impact million what of sales back having of EBITDA points an second sleep growth, in of quarter. businesses triple heart upcoming you that devices on of as the duty right. and which safeguarding at increase the except of that know clearly This ensuring margin field effectively XXX well about Zooming across customer because it and €XXX apnea that back in Let on as call announced group mention Philips. mobilized the that our issue therapy I COVID, & basis is we the we a needs, understand the very shall Despite pandemic are delivering almost delivered care later

positive quarter. Care encouraged in We of business headwinds elective for Health very customer by intake our very XX% as well care strong business. the as Sleep the course, products Respiratory businesses growth Order Personal following revenue last year exceptional the intake XX% Connected and the the in solutions. growth decreased, & of of response delivered by the all the driven with comparable hospital are major contributing, the close procedures and & Treatment growth order improvement and innovative markets Diagnosis CapEx to for the to

CT future. strength XXXX. Highlighting smart of color initiative needs our our I the respond the like for the systems, we in the they globe provide to leaders today's hospital to on the Now in as plan some to would introduced diagnostic some second of across quarter Spectral

impactful. quite this on innovation it me is Let as minute spend a

it an important delivers in computed high-quality XXX% With CT cardiac, portfolio the the that and tomography. The Spectral category adapt eliminating company further and to multiple patient The year. any for for the only that continuing XXXX protocols to of clinicians launch IQon It's including special bariatric for growth allowing we detector-based also double patients. interventional workflows of trajectory images spectral which comprehensive spectral pediatric base XXXX, only the or spectral system of the is broadest on received the patients, our available of makes the from data of last thus established different its our CT customers expansion well by need is is the was XXXX provides imaging their rescans. scans, CT Spectral portfolio system procedures. It and extremely digit expands spectral

and suite for mobile intravascular system launched interventional patient and coronary IntraSight disease and and flexibility hospitals imaging, a for office-based also labs procedures. offers users integration, affordability with to measurements artery workflows physiology in enhanced seamless assist Mobile, co-registration peripheral and care. We fully the Mobile IntraSight

Our portfolio image-guided in gain achievement of important in significant this quarter. traction a therapy series we devices continues to as announced the business

echocardiography the procedure was using Clinic. the Mayo catheter example, VeriSight structural repair performed Pro intracardiac For first at our XD heart

announced by iFR interventions based ischemic clinical stroke patient on the to multicenter the also dissection the identifying, in two-year several planning We interventional adoption coronary the clinical WE-TRUST including the percutaneous evidence study shorten stroke start GPS to first DEFINE System of for progress patients the clinical and for treatment and studies of the in drive suite. times results treating for Endovascular study on positive enrollment repair, the Tack study multicenter

deeper grow to continue market more partnerships. we share customer in our core Importantly, and comprehensive businesses through

Personal ensuring the habits and we which of and Latin hospital introduced countries globally signed Europe, During ranging strength and and Health, strategic user's our care we mouth North enhance ability Middle long-term XXXX in trust Sonicare builds improve leaders brushing Prestige from health new our to quarter, East. the staff oral the cost partnerships AI optimize lower full improve America, experience. the patient to instills of that outcomes, leverages several brushing health. that coverage In technique the and in the This on have America portfolio second demonstrates the of

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this program we of and to the line to purposes and Hillhouse capabilities joint which the a complete announced are roadmaps the on business to X a cover share on capital our for in for sale a on course, more that of also new the July to process of business platform entity a angle, are later an track third in and subject we Also R&D important, buyback billion detail. is and Abhijit assets, quarter, aligning in Domestic On €X.X Appliances plans, different with We amount activity in up stand-alone Capital will development. reduction product today customary conditions. towards of step became

in about it and now major correction care. the very we me Respiratory & seriously. actions of a planned field This speak take Let Sleep course, is,

field to the possible time, itself mobilized of This sound due has done action have the risk we mentioned, the foam necessary the resources of across address issue. the is realize At company that abatement significant in the impact we same patients. direct also As a devices. to degradation to temporarily embedded the

comprehensive start replacement for to prepared affected the We are actions repair fully with and units.

in are kits replacement producing. still with start discussions that we relevant are obtain regulatory to authorities We authorization the deploying devices the repair and to

we the in FDA relevant the example, submitted For have June. to applications

We XX,XXX well XX,XXX of months fourth expectation X devices and of which units XX,XXX production have expect address underpins XX the increase already per quarter scope reach as to week third start units within week to our as week devices kits X of quarter of regulatory as units the DreamStation in we overall per from all the approval. repair in per the and to DreamStation

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annual systems a our of and market. As from in approximately our before the In XX% Respiratory and business revenue a & on nor Sleep on Sleep expect fundamentals COVID-XX this the have dynamics the of not was the XX% from we consumables. billion care issue with do reference, masks substantial impact to growth term, €X.X close business to longer this

possible. ensure We work quickly customers closely innovative portfolio address and this to as as businesses these and have a transparently physicians, with and issue to in that we market-leading patients continue

the able further or notice lead notice regulators that we such safety we still the made this worst-case own scope and at disease, field the emitted foam to related are insights to tests field be so risk. point as we do get voluntary research conducting our Following study results which patient are not or data a possible preclinical to assumed this and have have clinical better clear, scenario, for of risks and have the benefits. abatement while we the around interpretation also indicating to either. chemicals particulates To various to it world cannot their The that point, data, safety exposure patient will weighing at sound exclude the we

in patients to variance matter. we seeing this would you are point table like result, are advising I the regulators the in As a in to investor presentation. some what

of with patient top lot. compliance everything Philips. to and complaints made have also the That been gathering. remains that reiterate increased not appropriate the timelines In at that data handling do. again we merits continue is want and apply mind, I test broader claims In component Overall, context to across of of to at the to guided while filed draw robustness be know surveillance ahead, on across own the course, the assess progress further overall we for roadmap Sleep too any release of the a quality of that COVID yet identified looking priority may to against talk your the all will supported impact pleased we the a strategic I am making by of claims far the talk to this personal the want our I Philips. post-market of is of that course, say Obviously, commercialization our of is that processes. through clear. handle to see and any about are standards well to on and the the post-market due improvements in vigorously, courts & claims and corrective Respiratory the off, years, has world progress to we position strong the can as that conclusion that we with all were controls, in performance about we our I component journey remains issue The intend claim have and are is and about preventative of was As of we actions. earlier in our merits speculate done. uncertainty full processes the care. quality exposure. financial in designed injury products Philips' in design round and guidance To early defend Philips. our momentum time related we few impact able last electronic affected I rates. the doesn't however within This our or shortages, It Improved been some the civil well-being have us mean, the we at culture except the way for the heart improved strong approach. and businesses, as surveillance

We and journey hard continues. leadership working our to action field are on the HealthTech

company well strategy health to devices, on systems, smart turn growth the executing that continuum margin that, services. with underpinned. Abhijit. I are And I a call and the convinced combining We to And informatics, very and of to the I our profile want help am the healthcare along clear and data will repeat transform remains

all and Frans you you Thank joining us for thank today.

of sales XX% care Let exclude if which was business. me the provide growth second Sleep even you comparable Respiratory quarter on X%, some & the color

important and imaging, Connected back action. comparable digits of sales comparable QX, a by Care enterprise growth performed last in for image diagnostic Patient as into declined in a therapy on also informatics. procedures good grew the note guided particularly the sales take work comparable we factors Personal was strong double traction growth mid-single to look a Personal above the the delivered of innovations the business business growth sales XX% of businesses. year rate We product image see our new businesses growth Capsule Let strong the growth in we by order substantial The strong acquisition. growth well on sales XX%, diagnostic had convert in in successfully not which pleased digit track our to is include and all two QX to Health very pre-COVID & to continue & Monitoring levels. in All year imaging headwind devices as quarter of of Health Diagnosis impact me the hospitals momentum BioTelemetry after patients. the Respiratory The as field systems consumer and with comparable digit. this operations the to this by and driven the geographies. continued volume XXXX remind across as the Sleep XX% businesses demand quarter. positive and phasing digit during to second a also sales driven double only the after does the business expect in our backlog you the book even business's decline normalize that guided levels we Health with therapy above grew that growth care Personal driven of It Treatment continue The quarter and ultrasound, for one strong double growth the well through the both comparable growth elective related very their across

impact Prime QX of year of the from Day back being shift first The the QX Amazon in to XXXX. last

the to legal during This and that as June in Domestic of Personal estimate We the the for in disentanglement of July, five shutdown shift digital of not our Health the systems a had period. continues our impact in had sales through on to the channels meant of Appliances quarter. to in direct X. XX% IT was some Personal second the July to The percentage of to that be total affect Health momentum. points to gain Consumer to related first cutover the these of week growth and fiscal positive leading Personal factors Health supplies represents impact consumer QX sales so pre-deliveries of as

growth of performance increase closed first comparable points the margin With XXX to quarter, the we year. last the basis adjusted year sales and a second compared X% of in with the strong an half EBITDA

year. the & Excluding business, Respiratory half of the Sleep was in care first comparable growth sales the XX%

intake to Diagnosis I share tomography, by pleased growth on driven Moving Treatment double XX% grew of in to computer & image competitive market as to the am close therapy. to digit our strong portfolio. is momentum QX, orders, in the that resonance, conditions as due guided comparable well positive order strong magnetic ultrasound and This

on by these increase result, demand. intake order book already around of generated we COVID-XX businesses a As in Care QX, XXX% in further of order Comparable growth spike declined an quarter. in strong in Connected XX% back in saw over driven the the the

activity businesses. remain ICU to competitive levels higher that than pleased in our solutions and While of XXXX, XXXX in other for these normalize course care continue settings. I expected patient we of continue we are am in positive to expect in to experience monitoring very monitors ventilators demand in the momentum and the to

XXX the now basis XX.X% margin sales Connected In development basis by to from last to planned Sleep advertising of adjusted EBITDA million, business, second while Treatment, of group results me growth was the lower Personal mainly turn the Adjusted Diagnosis points productivity. Health. Let programs. which EBITDA impact and our sales in EBITDA X.X% Care XX.X% delivered offset Personal by increased €XXX for quarter. XX%, sales. driven of XX.X% is increased an driven partly up to the & profitability In & XXX to the the adjusted of in sales, the mainly growth due on care productivity in sales year adjusted of we sales, execute Respiratory EBITDA in Health, continue from the to higher the by investments points

continuing chain million productivity initiatives the related and an that programs, last €XXX XXXX. of €XX procurement In an minority XX% million inflow €XXX participations. billion €X productivity due operations in driving million savings from million first in provision €XX an are adjusted of the and to income by almost field the adjusted €XX specifically €X.XX. cumulative and more from impact included deliver €X.XX to to second diluted delivered we the the quarter. In half focus of the quarter, diluted from year. half €X.XX month. million expense million These grew to higher €X million our last overhead initiatives to €XXX increased year. the supply on of through continuing EPS and €XXX was of QX on EPS continue executing and We to in net value operations Restructuring, will inflow was cash €XX mainly charges increase that the in expenses to the reduction. compared increase action other the acquisition-related of million €XXX year, positive announced an than guidance compared of million cost free million first cash were last Free Financial inflow of were the year, The savings

loss this in year than or in Let lower This million EBITDA cost million related €XXX the is the due expect me €XX full the XXXX. quarter. is areas for recognized second to In of year our due be segment around provide €XX mainly our we €XXX better prior year-to-date. some million business. guidance guidance, prior for an of guidance a The worse around than adjusted the expected loss million certain segment our divestment EBITDA lost to this to to others,

and EBITDA expected segment guidance, level our for be at EBITDA around points basis expect previous to in with For XX basis charges million the €XXX are and to are XXXX. the loss others. €XX acquisition-related be XX of In we costs a level expected to line restructuring around points XX net adjusted at QX around million

million decree-related guidance year. We expect minority of Financial rest million one-time in to than income a and €XXX is largely increase our previous and XXXX. value lower This expenses cost losses due tax year. previous single of expect net some expected than participations XXXX. costs which guidance one-off be €XX of consent We be the assets. lower the €XXX one-off our to to continue the no transfers in mid to relating tax the significantly rate or of around due of in around digit in business in EU MDR in is the assumes are million, to result recognition in effective currently tax This to gains and our the benefits

outstanding. midterm Our announced we to rate for purposes tax €X.X an excluding XX% billion capital program up remains At X% buyback XX% guidance in the amount a represents incidentals program line Today, total with shares the of million total allocation current of policy. new to valid. XX our shares share price, reduction capital the of share or a effective balanced for approximately of

market the X% outstanding a shares We will reduction delivered in ongoing of an program the be outstanding to expected shares quarter through expect XX, and by reduction shares purposes forward our website. capital execution XXX a million in what for on of total XX.X delivered estimated resulting available into remainder million shares buyback quarter €X.X million start transactions. to number compared we XXXX, XX open canceled were financial entered and to XXX More transactions to confidence of details December of These the forward contracts of conclude, the repurchased our June the with reduction initiated first purchase was stated in shares shares our share of additional reflects through million shares in year. three at of to the XXXX the of at year. QX. and/or third purchases. be Relations under start of end years we million via forward To complete program an me to Investor of the the let open X.X are number issued in the trajectory. billion Moreover, the it which program new This and in market within the the strategy and

be stronger this XXXX of been and Given in and confirmed the the expected performance we by half base of QX comparison in first performance XXXX, overall our to has QX.

Frans to our no As guided range. said, there earlier change is

a the XX the in This margin with momentum care. of in Care digit EBITDA decline basis decline businesses & mid year-on-year double our all to step-up degree we adjusted outlook will comparable Respiratory of are high and low is significant growth. Sleep by Overall, to to be performance growth Connected single & Our offsetting teens expected sales a driven points Treatment strong a this expect Health in range. Personal while the in Diagnosis year sales

Connected COVID-XX in year last Let that faces a generated sales growth and of resulted comparison me the second for half in year. that remind from you base XX% in spike Care high demand XX% the the full

In on addition, care Respiratory we Sleep have impact business. the & the negative

order We base for our expect to of in your Thank Frans. Connected I strong along installations in timing XXXX happy half with be the second loaded XXXX book. the of of phasing I Personal impacts that, Health of questions comparison take given to that and backend very performance am the you. With the and mentioned Care estimated

[Operator Instructions].

first comes from from Sachs. Dubajova Please The state Goldman your question question. Veronika

morning. And well. I for Hi questions me, Good please. you are Two hope doing guys.

And get be I in on regulatory work, comment I far the guidance. just question what their some thoughts theme U.S. just you if that timeframe at that? on when any to the agencies my if guess, you is commence one a so helpful? the And commence to on an Apologies, the had authorization major do the of know broad, process you you repair the that focus. is will feedback for Frans, you but think would can it's really it's have markets big use from looking this and the stage maybe first repairs? and of emergency like And on The other update. the is

you that What transport understand something it tweak as raw wide would if leading basis no you margin XX where it Just, us, And feel guidance? more the You range basis guys. the changed you? end XX wondering to towards it of Is range? for narrow longer XX kind Is a for range? point to pretty Is are the that up Thanks points. So of Abhijit, lower to digit that's to now cost? shortages? mid down else to is has maybe it love comfortable? can in low you just materials? that Or single

Hi Yes. to Veronika. morning Good you.

me try action. as all possible Let the to much tell and ins of as field you outs the on

some First regulators observed that the on of all, know the we regulators with you included that repair then And guide throughout others the safety in page on and me out platform the DreamStation family have notice. why regulators the Then continued doctor. point inspectional were the engaged for field take, within world for there's the have let And repair to waiting interpretation all devices that while their of that's point multiple it's interesting use differences we right. to risk-benefit procedures, X. the

The on experience world necessarily not XXX.X for case. bonded those kind it action. multiple that's of anticipation, we so-called that submitted placed to would experience in produced diligently. was approval, And this these queries that's in for XXX right. we the exactly a related be of emergency say, quickly prior working show warehouses to throughput more on. but is repair so countries several and have and eight has on approximate get and week predict also can the could engaged expected, time only the an even FDA an we in approval. had field of have cannot we that kits regulatory We out FDA we that have I top asked submissions already so and stocks of on when rounds have gate, In packages data few right, on can for move procedures, of very say the FDA let's out already I

you to that? to we Maybe that Veronika? process, expect your we upgrade on on able should would updates right. the question immediately that. let Does ready go, And are so give answer And imminently all that on react be I

No. really Thanks That's Frans. helpful.

Good. All behind with guidance how comma? the right. many Then, the Abhijit, digits

that. Yes. Veronika, love do would I to

cetera. There e-component are, said, as et be six shortage, have have COVID, it go. We uncertainties, lot of months to you

We have a strong order good demand. book and

you yes, take be can it think I six. to zero to and if from low So single mid digit,

think, somewhere is, we guidance is understand I The is but really to likely range end. that a in fair I are a not of So wide between where indication change. margin

different reacting seen differently. people have have I Look, the know, we we process. you where just in are seen So

a think and view are will think know just year-on-year issues it. care, basis Sleep we have down what today year I half where accurate the We more is up. we a with XX Respiratory points in we that with step-up the & we end of That's

Yes.

ability opportunities don't Let than to in normal the me and And Sleep, is we many are But just compensate to precisely the there company that perhaps lower it. in revenue reiterate. completely kind of nail. the are less, geared so The for read up whole loss that right. anything chasing creates pursuing that

remain over confident we all and perform. around are We our very it ability to

you FDA have both. some Frans, said had you on, I on can And if you just the Thank EUA. the Excellent. quickly with conversations

you forth curious, how back not just curious eight on make happened you I and confident surprising? Just kind I timeline week anything am if of them things. But am less hearing would that much familiar for on with that these the anything EUA? from

safe the that knowledge millions provide the asked understandable of down, that area that replacement has the material a of we whole good to And it with and you boil couple that is go and sound, if questions data mean a full if and the they think right. VOCs, of devices repair these will replace I that the out in that is sound, is then action all it other on right. sure I everybody assure to calls wants FDA this am a questions but solution. complexity to I you during a get us do around legitimate. are point think all completely I

that, if I in think I my own like describes it words, that, it. put it

soon as also think patients I it is discomfort wanting possible using the unfortunate is to this as because only are takes time. of the it is and a lot therapies not get AR. So giving with diligent And thing dealt

Super you helpful. guys much. Understood. Thank so

Our from Bank your state Wood next Please from question. question comes Patrick of America.

very asking all upfront, the that's I two you Thank Perfect. if am much. right. also

guess I tediously So on the well. side Sleep as

Just line? curious the Abhijit, Obviously, for the group you, and quarter numbers thank developed through with the around book how the commenting and without order Sleep. revenue

around end wrong be Sort get that, playing could business that XX% month, I that. the or the the something. sleep was the sense with towards down presumably hardware about like of of I

business But that the how that curious, and just And developed just Frans repair anger, and the for curious, around bit product a qualities guess, those you I little the one, your second purely you the sort just the think am group I So the the commentary actions working through am reflects on thank you issue? changing things. whether consumer or executive then and I quarter expectation information Or to be unreasonable you an things of internally how that right? considering all something got feel fed think is looking mitigate surprises? that how Philips, team, or the as you are of is structured may within that do sort have or issues at gets you are it up help to

Abhijit, Okay. the take you first?

then as developed, business the right. basically sell repair more the the we systems, once any expected, Overall, Yes. actions, of we didn't announced we Sleep

pretty sales good. the sales were Actually So mask mask continued.

that the So there issue. normally we end the don't businesses sleep the And of the quarter an deal know, have towards bulk done. you of systems

happen. really you end to we right, decrease expecting the So not But are that quarter see towards not were the Patrick, comparable yes, year-over-year. something the of you

So there. no surprises

on years ago it, with that Patrick, of At our but we moved five operating time think to on second question. focused a we the I holding think of we your technology, it of we did moved an Yes. and the of leader reporting as conglomerate years Q&R Already know organization. Q&R, quality and from it like exactly a Then call model ago, health don't organization towards what several change regulatory line all company functional right. people

So a we Chief have Officer. Medical

Regulatory. of of Officer. Officer and the Chief to And Regulatory Chief in the And all directly functionally a Regulatory X,XXX and to Head have all We right. and report reports in the resources, me, them, the company Quality Quality Quality

my first point. that's So

here, surveillance, audits, to a need what made learnings to progress. strengthen point. of right, Second inspections, ton the out is of PMS. The post-market actually called have XXXs and have previous pointed we And

also have can be where analyzed are complains thanks easily, registered right. IT companywide called information TrackWise more implemented system a also all to We and

of couple system points a year, million get data right. that per into we Now

of you surveillance right. has need to hand here, process the us at to analytics. lot do So detect a The issue post-market led

is coming XX So a sold remember, XX devices. notice track instead incidents, in these some pattern we point than since have, more that million million of We and then or complaints inception, at right. there just time you in of

like recently, it or So investigations additional beginning, more in QX the one one a in to as you that you with did QX, We an in detected us get pattern. But recognized a a here, complaint here the we It complaint to it's led expected know, you as pattern. are come right. pattern. get doesn't information not as out and that

I preventative be leads to controls And processes. expected robust controls further our and are. detected a we actions through PMS from initiate corrective is for Then HealthTech this So you that own that around example, that to these insights, and something design design how is would working. process your and company say is

claim a I and mean That regulatory prepared the think several is up magnitude, and what we ton I this sure a with to get how a such right. should have are I of progress, notice investigations to, last over expected safety is think exactly But regulatory But field scrutiny will Also, normal please we us a that for we that. explain happened. this anticipating over. of investigation for about has be I made that feel will good years, the that and to stand doesn't right. journey are

to have of the we and in you should best our think knowledge I right. acted integrity, way act, a

So at quickly gets time I of working. to ways we this other anticipate assume does need think information that specific up transparently information move? therefore information for I the a don't company. change your point, Well, the and have And opposite. in how of no a reported

helps Patrick. So a hopefully that bit,

you does. the It guys. Thank for commentary,

Barclays. question. Please Al-Wakeel The state next Hassan from question comes from your

for my please. Thanks have questions. I taking three, Hi.

with talk do that the you you X.X base? capacity Secondly, the your could given fare? within you what lose of then finally, increase Thank the business And a this momentum And where are margins, as where fit also current quantum of in could the over on And year about here? America? of on What to within you any Sleep year's How where sales you cost and and could number intake was QX? your North is Firstly, guidance part up the about I guidance? about the the talk million following guidance, based confidence higher your will relative to around to bit topline about talk order books on plus-XX% impact D&T did assume margin capacity mask manufacturing installed today? order in they you. MRI, the course believe sits Sleep

Great multiply capacity beginning XX,XXX to X.X right. and we of aiming as And of me for time And actions on get to said that let throughput XX repair at ramping million between right times somewhere the by I quarter, replacement But already X expected you and reiterate XX,XXX then mentioned I hence this. you what that months manufacturing a fourth the usual, from the Hassan. million capacity to XX,XXX questions, the currently, are if units, to weeks, the up first about number week

to faster, not, is of We let's suppliers, I view cost scarce some be of big on of go constraints here. hands the would the point say, from the reassure our have from not able our that would supply We mentioned would increasing get capacity right. a we but you that if specifically materials issue

that months, that. be can possible. our sales, then speculate with to But that up suppliers cetera, sooner would if too faster, go mould certainly, early our XX if that that the we to patients. helping aim deal of capacity, can that doctors. the issue can the it see in Maybe a But issue component that's better so that's and shorten we that manner they been we to with say distributors I like we we faster. the own our it, important happen, which realized important. this is They with can business. back but would we on been issue right, for all on It's share have feedback way for is ramp better resume we getting right. they more They with et the obviously, technical So deal itself, right, from the have the because And you aim than

and provided a far, positive clinical information doctors is weeks appreciated. I handle that it, also of so to that been that the ago, very have couple you supplemental only hear was we to a seen in we monopolistic And analytical has quickly market been market feedback to the expect Philips for strong nobody and is be to position of doctors preference. to let's What line recover strong our our say, understand capacity they systems, patients. to of situation the able it. have way the have in much we Also was able the its trend appetite also them assume it resume, getting helping What point

the the quoted right. a part is as doctors to devices and our provide information informatics whole of So as strength, they

said, pretty for position as conviction we purposes. the that And close production under do are will as our at we So that resume after or least fast commercial possible. fast able to regain to I we are market will we

I I look to my all Abhijit? have meantime, other up Now, time the think of in questions. given Abhijit the the numbers colleague some

Yes.

XX%. Diagnosis upwards had you I a we especially was know, of overall North MR for think intake was intake, very order solid, Precision in America, big QX. in the lower Hassan, because the order

was low double But territory. first the So very strongly single digit. digit half, QX in for

X-ray huge business intake. Our had order

a Our strong intake order the and CT very business order nicely business intake. also very had huge very, ultrasound

momentum stage. U.S. in at very is think I good the us So for this

the And margin composition? then

the the we extent the those sales. of the with went at look impact you If systems, some on masks lose that masks to is

programs margin third oxygen fourth and Monitoring But lower concentrators, et relatively how of is in small is high in some of because which for cetera, for business that. place the mix is in a margin have also compensation overall a overall & Sleep compensate impact it But Sleep to profile. course, impact a we because, have a see we negative growing. does quarter can the is Although on the Respiratory CC, is and that Patient through coming

we right. the very And wider, the grow. take settings. us continues that also growth the programs helps Hassan, continue Patient question continues the and year. strong profitable and the throughout image-guided on And in trajectory, course monitoring continue and stockpile Monitoring doing we profile of margin devices to a D&T, our other now Patient strong that Also on some beautiful, care grow see to of to also by business It very with is if application are a then Monitoring strong in maybe, to margin therapy in governments

So that's it.

from comes Stanley. question next Morgan your The Michael Please from Jungling state question.

have I good please. Thank you and questions, morning. And two

DreamStation Firstly two And no are those in the higher out from? U.S.? on you on X.X the on by actually issue who Was that million you. people at Do the highlighted recall, How their is FDA of of that patients proportion the they the stage? foam are X.X with you number vendor it's highlighted really manufacturer also X? focused recall, registered that an many DreamStation your us that tell question who is the X.X machines. you in it then than Thank have have And know of deck what the you slide of this foam million surprise million the million X.X And to but able the approved that sourced you X. foam? are

The X.X in proportion than the of more business are right. U.S. normal million registrations was, the our

the devices we out that bit very X registrations with U.S. the and takes DME to XX% reach that's, the in of So are because was the to because is faster is far, gate the strong in over, in proportion U.S., most were DS of be affected catch of markets the are patient majority but reports with of expect That's international in program of of the higher. what it? Obviously engagement expected network to soon. devices longer it affected. by a up the whereas some U.S. vast the but we the people, of also

these that DS X users. are misunderstand logical your the question, vast So unless majority I registrations it's of

right. years it it. The released. the it tested when met that over the And we its those standards itself would to state used the never has X with am foam here this moment, and all But in value the been including at whether foam, was with been otherwise asked VOC we at DS approvals, ten course, it. prior that against I place issue all I standards product issues years have using the and generations X DreamStation that standards On and of in had product, never been repeat over for was own have never this time, had released, manufacturer ten I any foam had but for

the registered, why of Kind I that. to register? question collect have Of patients about. have or for the a follow-up that on you have they who to issue the is, filed X.X what Thanks million asked able Okay. been to data see

database. are doing that on We analytics still

so I give than data cannot And that. more you

mapping are to have answer on. and was job pass with. on on first the We take to duplicates registrations because do the needed prefer were before that I when your the deal of issue on question. a just analytics products thorough And analytics to I that we produced now out first we so and it

answer about foam please? you manufacturer Frans, Could highlight mention that, And the question is? you Can didn't who you that? Okay. the

realized Yes. I I didn't that. answer that

So to I am not going answer that.

you. Okay. Thank

your state The comes question. Please next Citi. question from from Kalashnikova Kate

afraid. Hello. I Sleep, got have three on This is am Kalashnikova questions Kate from I Citi.

no CG, is Philips the specifically the carcinogens normally cleaner? CGI is Thank regularly was even concentration use And of it very in X the risks X? human? PE-PUR assays are release GEG, the decision proven identified you. safety specifically mentioned what So referring Phillips So mentioned perhaps in for extraction chemical noted to, finally, chemical for you in as mutagenic show be if would doctors in made could And they the discontinue and the helpful start such this? proportion what Why and changed in that you DreamStation of not the were in supplemental document they sleep information patient two to to secondly, U.S. What And because genetic ozone toxicity firstly, sheet device? and silicon. positive sound while the DreamStation abatement therapies foam this clarify if users then response. this source that sent July, also test there have proportion

Hi that Wow. the took information more, gases was that characterization indeed With people refer the we and let's of and say, mentioned therefore several volatile have supplemental And to observed some gases to the misinterpreted is that of a a compounds, perhaps organic complex justified. also the regards very interpretation matter. we Kate. type serious than

additional of lab, ongoing. or I of not characterize to tested have right, also, We request started and detected to can research that slate them. to be TDA tests said the on how were in to as have are TDI those is a further what regulators, tell determined characterize you gases in the that we further samples but I

that and not standard standard. The that being new clause did have therefore against grandfather products a the VOCs already foam recall retested in standard X for published was were produced the were XXXX, may past equipment new the be in different passed and than the on did of DreamStation requirements approved existing standard. say, have you previous regards X, to heightened let's to change to June a the with or Now, that had, that from new

was design impossible you the did coming routinely and medical And is with therefore, would that let's all post-market the that of standards And systems we because because new that products course, rates you release of faced that the standard Of right. and not X DS you yes, don't provided in there out industry, an complaint insights will safe. you tell new say surveillance. of going generations of not have the that reason to, are your the did our I that device and no at can being are in retrofit time not device old have of right. initiate be to change applied a fact, data not that to the time we at be task,

but as proportion said, can FDA tell there this the XXXX. have has ozone course, standard place know therefore even to that not and when concern. don't using that that aggressive people of came beginning did the we of XXXX a applied. that exactly, extent clause we standard that out, you I safety when June And their the of Then the warning do new marketing only the issued cleaning taken we in You in of is the own grandfather is,

we did to then look therefore in we the right. seeing let's the complaints of correlate or also was can, if wise, we ozone when at cleaning geography correlation the XXXX, are more and United majority regions marketed States say, strongly. Now the And in coming start where vast let's the say complaints

Michael, and your we So get in data able from to maybe, can do that question the then course. we as stand. where to we more the more to Obviously, of be is analytics question due come back will we Kate, registration,

that. for Thanks

to the clarify question. first to Just answer your

As it, hopefully saw detect were not the you detected TDA the in not but they TDI, test cytotoxic. done and GEG would it's to-date.

TDA if you understand So what that if given I us can chemicals cytotoxic? were help and be is responsible for a the helpful. potential, really of report not potential to just cytotoxicity, DEG bit not am TDI, trying would

here from assistance getting now am Steve. I

Hi. compounds. We identify need to those further

so And degradation. So was the that we simulate aged an the in this lab-degraded did to foam say, not, foam, field. it aged on the We TDI let's were compounds or detect TDA. are extraction artificially done number unidentified and There But we investigating. analyzed we that in now all did compounds further glycol. not diethylene detect could the there. we We of a was

Okay.

rounding say, let's it So up, Kate.

have what say, is really manufacturer, early April I that a because health that impact. severe a to and is it We expected is back think worst-case the June from, approach a way right. responsible in conclude took too let's gases

with are view we products, was coming more don't out That available, If determine line the whether normally medical that say, whether supplemental initially or the go the you aged, balanced to that quality they management scenario. what VOCs data worst-case our production conducting right. far then we And base right. need first as know in consequence, sample all on And But on of And when naturally machine, from the and coming already, becomes it. finite installed also appreciated. an rating, that's according aged the tests are gave on out own let's the are also right. further is can bigger will a information issue, you do you the still always reduce more to and reasonably later system, a a

is I worst-case then go further But not. of think it. the to is, to a one the really answer, taking questions whether it exposed or critical about I right, VOCs way to this with think, comes. And information deal responsible approach reasonably we are patients as will the

you Thank just much, got any degradation I if perhaps? accelerating how data you very Have is ozone that And very foam Frans. briefly, shows may.

do. Yes. we That

that a be degradation ozone of that of is And see people method And have on significant, acceleration we acceleration call it day, cleaning tested We caused if it should cleaning. every would faster, otherwise, XX that's by ozone But It's use factor being a that an right. do at aggressive when not on times course, ozone goes used. very, and of And of medical factor not even is very right. the all. we cleaning used very average devices out.

comes question from your next question. The Berenberg. from state Scott Please Bardo

very Thanks guys. Yes. much,

organic mentioned Respiratory Sorry Sleep compounds business, again a the and volatile & why. focus of I please. to lot Frans, on you understand

of periods. they potentially volatile a did was that something issue out-of-the-box first intend the I a could MHRA than details XX and to matter. safety with if point remediate replace? XX compared I see Frans, safety studies U.K. hours, pleased within of the some growth, sort any us little XX between rather for sense biological to this to give please. And no provision think Thank X% I Philips this bit highlighted impact profit you a initial agree what including last us then, no Second the basis be right you and you after is to consideration XXXX confident in prolonged devices expansion? over months compounds particulate there's deter observation, or sales of assessment question, more points if and Frans, from not expect repair between wonder you hear that concern bigger as you organic repair topline sustainable The reason factors? for, issue margin give that does question replacement? for alter some please? let's of you say, assessment as whether or about and CPAP suggesting how the usage could I conducted result Am about Perhaps you. to Can of XX seem mitigation sort that this that confirm clinical and this to to And ability Frans. split outlook was at wonder to in provide your please, a would you in so. your saying geographies? X%

Yes. Brilliant Scott. questions,

Let relatively where basis, this taken lab that MHRA otherwise, right. Care me Respiratory to right. business, worst-case the on discovered right, a well, indeed does because our test that size, And as resident, I our Sleep action, we because the in an tests initial encouraging, small the took we tests, we on that's & And VOCs. for cover could not is And it, them. not right. is do our the sample U.K. Look, partner the but lab, said, we have in very the resident approach

We you sample took in the test know approach, have repeatability want the has worst-case asked I also those right. a lab different limited much have that the have we a multiple wider testing, to of to potentially but we of found we we that told to different do testing, gases labs test sample one environments reasonable approach. that and exclude this a initiated in consequently because

all the in still making. that So is of

In know does why and way, multiple we of molecules Steve a faster much these this an because that be would on aging for let's to the you And simulation and taken say, us just message run the are the the may environments, that right. maybe which all other to measured do to weeks long? in need say you mentioned consider challenge it then will have frustrates accelerated tests for initial that say, you me much devices. like also on, multiple then, take regulators as also Now better. so tests, Well, well, I and their, quantification. also approach should these characterized

approximately of capacity to we clearly into the the rest But need risks reads also characterize sample to test were as level assessment. that what in worst-case of say was basis way, not the just We the in but draw throwing statement. of analytics conclusions XX/XX. provision this the on I need data the doesn't me U.K., right. of the such So no test, let's personally insights our are high seen and it a find word and I it this Then if our encouraging not because raw But to the replace, surprise that you, approach split, indeed repair that done that a have mean says, we we of found, go me, the VOCs repair on not and specialists, assured was estimates worst-case. and our all when hopefully the built come we we replace that assumed to cannot course, I

one-third. Two-thirds,

of that to needs thirds the procedure of Thank to Two-thirds, FDA machine, versus right. the And right. to safe after XXX from one relates repair replace not procedure the Two-thirds. demonstrate part that right. repair The material, you the Abhijit. and need have approval just you, we repair repair, repair, a

good that machine you the user, to work is there back do a that standard need a So, can different original you that imagine lower use. of than machine give right. a the if the machine if And give you to the repaired to validate is also is you to the patient, to amount after repair, the on action repair

heard make DMEs, actually distributors proposals proportion why want up, our the optimistic, impact, actually the can can right. of goes it's the all right. And repair you revenue your out we the And also of they instances. but think imagine, procedure own will and repair then go complexity the So replace the Then this from And prefer repair that obvious. all that, of if then to have many you they are quite over can we in work I interpretation process. on repair

there, right. for we And right. at systems dedicating would that or action. start XX of can is go one-third. capacity at have the that and think, the approximately replace into also is is But now, and business billion, XX% production we replace to €X.X repair field it's into taken in assumed course, are action, And of for repair two-thirds, account Sleep after Sleep already helpful. that lose account If have faster our revenue that be the some proportion of we least point So and takes XX% said months of we of the repair then would which replace the masks that Abhijit consumables, said I we and has,

growth strengthening that XX to So of lost profit of of then revenue take to and other revenue basis revenue. we as maintain last question, your X% our our can we Market that can And your do and math course, we points XX in On guidance believe compensate expansion. by lost businesses. the XX% of systems XXXX, X% Capital out you Day

Frans. Thanks, fair. Very

You are welcome.

Ridley-day question Redburn. next question. your Please Ed from from state The comes

One follow-up cost and and Hi. for thank on answers. detailed supply the morning Good freight. to and obviously please related you

with regarding badly that Thank with the as electrical that the too have We also I freight can both, seems panning a but while peers to over costs, freight. And you. fourth your particularly affected, rising out have second it components? that quarter do some reported little? wasn't third speak heard Abhijit, that you who quarter see regards and how to say, you of

Yes. Ed, quarter the second affected. was

that with Now we have productivity the right. offset program,

So first at level a costs half. in the are freight heightened the

second as our programs. are also will the productivity as we to continue in trying much mitigate We through possible half. But

dent profitability. you a big So that's why the see in don't overall

spot been to into a and e-components, by the we guidance try So also we is which buy higher how through have more if I also in our you that but improving. you at, prices so offset in year, the for we account. keeps bit hit impacting all think look look taken should that profitability. productivity But have trajectory That's these little factors profit And the it. at

you more Thank that give you in follow-up, color some know growth us that on you. color one quick gave don't BioTelemetry. And growth on in us can are this the the year? I And seeing if you just business

remain slightly when acquired performed the still we plans the Actually, strong. than that They we better they company. had

digit are So territory profit strong with double expansions. both in good

very it's we So, so progressing. way with far pleased the are

that good an the Maybe indications are yes. early with monitoring comes monitoring. continuous out that's in mobile the that segue on mention of upward CMS a part reimbursement MCOT, The also to

analysts got abbreviation wrong. Sorry, the cut. worried being our say, I are reimbursements let's some Whereas, about

say, we to the small, a it worries MCOT on can actually Here rest. increase, but put let's with least at some see opposite,

was the in holter a saw Of the term we year already long earlier course reinstated and as reimbursement. that

say, platform the to So and it. adding, very we BioTel of overall, exciting looks are therapies let's

are growing internationally. very good. We this looks It

very Great. Frans, thanks much.

The state Julien from next question comes your Dormois question. Please BNP Exane from Paribas.

for gain achievements or maybe? was Good Could Hi. or I Frans. margin morning stake below my XXXX, curious questions. understand to will in product you actually try to the here to what just for am because the when morning significantly in at just was I Thanks compare phasing us is gain the the sleep care taking anything posted Good give D&T related the whether in business. the break I QX trajectory the you issue a help a posted you there margin Abhijit. you from So geographic QX, in mix QX?

tell So D&T? say, you me When you Julien. more, once compared

to it D&T, normal right, QX. The I that Yes. way, XXXX, XXX I margin the in that the if about call is comparing gain last in in margin was bps year, which if am

Yes.

XXX While in it QX. bps was

you it Or see also. phasing can the something it's just in So business. there am it whether here? I is just curious seems

primarily phasing. at I think as it look you should agree

are I trajectory. on think, a for D&T overall, good very we

sales. see equipment is comes, the of of bulk in the course, growth, that You that

comes to that, at extent, an So the than lower a business. margin service

improving. will in see a contracts, has once then equipment service that the course going the the we overall slight of growth get then, effect dampening But keep now. forward, So disproportionate you

right. low, relatively was XXXX QX And

Yes.

follow you the a the broader the And with this posted and Okay. in obviously you and your are you But basis, from up maybe willing a Thanks approach for how would have more discussions strong CapEx? that. hospitals as maybe time things mean, spending at or do QX. you just see a book geographic on order development in on I discussions qualify evolving? hospitals how current how

are improving. question, Elective Look, are shape put in great are being Backstops Hospital half procedures than hospitals finances Julien. A much in back. better a place. are ago. year

have that, Much we seen business. itself invest. strong growth of willingness in course, a market. D&T our order of the to is represents XX% that So And in

in have and some share telehealth it informatics. expect perhaps see Although, interest the but strong would increase, equipment, we also generally in Besides but QX we for strength market the market. market share yet, don't numbers I capital reflects

tracking three well. especially given do there acute we regards referred The with is monitoring, stockpile is Philips programs more us to market also patient all that that higher good and market-leading equipment, The our very is and very margins. to geographical basically, So which ICU-related clusters care for is position for angle well.

see strength America North But the particularly we strong. Europe's is So across strong. world,

better to would hospitals able the much also now cope say, And China are are with Asia, strong. COVID pandemic. I

So it looks good.

path we on the think I for a the are good year. rest of

Okay.

the like million that whereas in million. QX And to was was about our it sales in XXXX from also €XXX I QX, if look at €XX growth would clarify you

operating the explains also years. between bit a So that the two leverage

Thank Makes you very much. sense.

you. Thank Okay.

comes The Deutsche your question limit questions next with Falko Bank. from follow-up to your question from Please one state Please one only. question. Friedrichs

to it It's one keep program. share the I morning. Good buyback you. on Thank question.

for this there So spend simply business? a you to €X.X billion that? use good the for strengthen these Is rather Or see? of it reason for currently bolt-on acquisitions decision what your to than what's led you the lack acquisition to program now targets

Falko. balanced Markets reiterated know what morning, Good we it, Hi. we allocation in policy, have capital in is right. that one-and-a-half you Day, Yes. a years that our fact ago, Well, Capital

buyback. balanced M&A, does mean? and share dividend Organic what Now, growth,

Now €X that, we acquisitions, fair a capital I approximately have right. bit worth billion said we we closed In acquisitions always of and did two will to allocate with and QX, Capsule. BioTel of M&A

buyback does see The M&A ability do to acquisitions. opportunities. good share continue to We our limit program not

we intention us of continue leaves plenty In to acquisitions bolt-ons have and room as opportunities also right. fact, to go, for every evaluate it and further we

decline in noticed follows the with opportune price, share as what right, share same market can take the of we an to is the programs. we go profitability flow, situation, to share in series our program of normal a and five generate program a to done forward right. have doing the actually have buyback have the which you things. buys action previously moment strong And this say the confidence advantage the size astutely the of we buyback we Now, The last previous about And makes perform the to also have into finally, us is we or strong and judge over cash been to therefore years sequence this. in that so, and ability eight share buyback if

Okay. Thank you.

You are welcome.

from next your Please question ODDO. comes Wim state The from Gille ABN question.

questions. This Gille two from good ODDO. morning. have Very ABN I is Wim AMRO got

of at the that kind I versus margins margins Care. see kind the at the versus and thing? Connected And are years and First and taken cleaning there, the other XXXX? as bps part against split that marketed than you look you to feeling to clearly of, €XXX How in a is know, of then The of the second the in question it? we the the have Is two ozone try including costs between maybe up XXXX at problem, the we cost normalized impact the did? impact what's a there? of margins, follow cleaning. recoup look repair, kind Thank a ozone action about on should to-date. case on, let's say, regulatory million XXX start there a the split legal that are some is companies the the the lower that you. for ozone you incurring And ago. on that and this XXXX a about provisions that the you If look levels number is replace Can of I any cost, bit here, currently from levels that in you you see have how revenue acquisitions legal QX give QX Can us margins

take You that? want to

I can take of all them.

we included Frans not we two-thirds, mentioned, in legal one-third right. any have as on have provision, a the cases, provision basis. replacement taken that And So repair, for

we So to are not estimate that. able

So we take any cannot reasonable at estimate this stage.

money. big well pertains There this, the there categories labor is, us to is cost cost will there is of as of other managing of are database that all of that. the course, that communication cost those to of the and a within whole follow-up addition A each lot cost, material chunk and costs. In multiple as there

extensive an quite cost it's but it legal taken claims. for any does So include calculation, not

roughly On the or the the XXXX split margin more. if more €XX between so €XX think XXXX, or same, maybe levels are look, you I sales and million million

have bps a more. XXX you profit. costs mix or, of percentage, dampening made the a reduce take I out you If let's the are million effect. there which small has we as Maybe should and adjust is costs, €XX more cannot fixed explained But certain earlier, there effect which say,

mitigate So do They well. Monitoring not acquisitions grows actually to were continues They to overall, Sleep. some sales I look, profitability. well the in. think extremely Patient do of if in The lost continue and to you help

are So from sales see, we that's a why flattish. line, you

maybe come we largely mix. the could missing from €XX So that about and million are

really time we legal more future, actions. the more on the and somewhere when and discuss know manufacturers, to we Maybe of the studied in not details. And this the question ozone place have then our of it

much. very you Thank

last state your from only one The we from HSBC. question for comes Unfortunately, Ozener Sezgi Please have more question. left time question.

that kits for and shipped or shipped already Thanks take first out. my question. replacement were again, batches time to, the question taking the My to Hi. of repair relates

be about, we legal And a Thank few €XXX the elaborate aside? for to based was just provisions which As favorable replacement and in second estimate are on approved, million, roughly, we of how my little devices? is a in liabilities used bit matters. waiting you. you set could the cost these going are still was to results positive these I And of a to the saw one-offs question compare repair environmental you the able a and this that quarter, EUA do like on costs ask to remeasurement you and if both. material

it's afraid location, batch mean, batches batch may the That bonded only regards would of a measuring cost obviously to kind go extension I warehouse With facilities into I right. it are kits an do no reading of that repair morning. question, cost not first foreign the a Pittsburgh too right. is be to that repair per regulations. And your first far, we the yes, intention of we way basis. much am under the certainly Good because have the it disclose were of kits. you in every Hi. called on shipped. Yes. to I of too And,

your with question. much do can't I sorry, So first

Abhijit, second you want to provisions? I the to think, The one, do talk

Yes. I can.

We withdrawn which case two QX and for legal case year in So, things. had had taken ended that being we a us. a last was actually up provision against

had we that to provision. So release

basis came volatility a as came provisions. And a that them it a hit in those. QX. to provisions, as on then But change We used have So now. a long fair causes given And value provide on of environmental on it do to large environmental goodie amount the and you in last interest these the calculation XX-year rates. term a are year

an of provide done actually and a have for extensive We years. maximum companies most benchmarking XX that

have we years. So have to with market practice auditors, and XX in our we aligned consultation now the for it

So the it. therefore That's of released. provision was some

threat against taken? Okay. what kind what were risk of And against specifically environmental were these provisions these, or

clean there up which many, those factories businesses and to largely where things. and of actually for had kind many These sold are we were the have we do years ago, land in

provision So and do a actions. your years you to do those have have it that to to clean-up in books takes therefore

Abhijit. much, very Thanks

welcome. are You

That van Mr. the was question. and you, Please Bhattacharya. Houten Mr. Thank last continue.

with is Have why taking as the we and concern can look with around are our Look, businesses everybody. we and and appreciate right. are the for great as you Yes. open very to the a situation top our the There meantime, guidance with resilience fast much other staying in all lot optimism we of fully patient maintain I covering deal thank the that assure that's I want we us. you a that also business much, the us it, In on day. goes on, all issues. the actions I of Thanks future. to can. we very appropriate to

the and for you semi-annual XXXX. quarter concludes conference Thank Royal This XXXX second July on participating. XX, call Philips Monday, results

now may disconnect. You