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Koninklijke Philips N.V. PHG reported a loss of €0.36 cents per share in the fourth quarter of 2024, which declined from the year-ago quarter’s reported figure of €0.04 per share.
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The company’s sales decreased 0.4% on a year-over-year basis to €5 billion.
Comparable sales grew 1% year over year, driven by an increase in the Connected Care segment. Comparable sales in the Diagnosis & Treatment and Personal Health segments declined due to weaker demand from consumers and health systems in China.
Koninklijke Philips N.V. Price, Consensus and EPS Surprise
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Further, Philips’ comparable order intake increased 2% year over year in the reported quarter despite a double-digit decline in China.
Sales declined 9% year over year on a comparable basis in growth geographies. Sales in mature geographies showed mid-single-digit growth with strong contributions from all regions.
PHG’s Segmental Update
Diagnosis & Treatment revenues declined 2.3% year over year from the year-ago quarter to €2.44 billion. Comparable sales declined 1% year over year, primarily due to a double-digit drop in China, which outweighed strong growth in other regions. While Image Guided Therapy saw solid growth, it was offset by a decline in Precision Diagnosis.
Connected Care revenues increased 5.4% year over year to €1.42 billion. Comparable sales grew 7% from the year-ago quarter, benefiting from a low comparison base due to a sales provision recorded in the fourth quarter of 2023 for the Respironics recall remediation.
Personal Health revenues fell 3.9% year over year to €1.02 billion. Comparable sales declined 2% year over year, primarily driven by a double-digit drop in China due to weakened consumer sentiment.
Other segment sales amounted to €151 million, up 7.1% on a year-over-year basis.
Philips continued to lead the market with AI-driven innovations across its product offerings. More than 50% of its sales in the fourth quarter of 2024 came from products launched in the past three years, showcasing its commitment to new technologies and upgrades.
PHG’s Operating Details
Gross margin expanded 340 basis points (bps) on a year-over-year basis to 38.9% in the reported quarter.
General & administrative expenses, as a percentage of sales, were 2.7%, which contracted 10 bps on a year-over-year basis. Moreover, selling expenses contracted 50 bps to 23.6%. Research & development expenses increased 50 bps to 9.4%.
Restructuring, acquisition-related and other items amounted to a net gain of €286 million compared with €548 million a year ago.
Operating model productivity, procurement and other productivity programs delivered savings of €47 million, €56 million and €59 million, respectively. This resulted in total savings of €163 million.
Phillips’ adjusted EBITA — the company’s preferred measure of operational performance — rose 4% year over year to €679 million. EBITA margin expanded 60 bps on a year-over-year basis to 13.5% in the reported quarter.
Diagnosis & Treatment’s adjusted EBITA margin expanded 160 bps on a year-over-year basis to 12.1%.
Connected Care’s adjusted EBITA margin was 15% in the reported quarter, which remained flat year over year.
Personal Health’s adjusted EBITA margin contracted 190 bps on a year-over-year basis to 18%.